Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

London County Council (Money) Bill (Standing Orders applicable thereto complied with),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely,

London County Council (Money) Bill.

Bill to be read a Second time.

Private Bills [Lords] (Standing Orders not previously inquired into complied with),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely,

Barnet District Gas and Water Bill [Lords].

Bill to be read a Second time.

Oral Answers to Questions — WAR OFFICE (STAFF).

Mr. Banfield: asked the Secretary of State for War whether he is aware that although there appear to exist in his Department no reasonable facilities for promotion of experienced staffs in the War Office it has declined to allow those officers to respond to the invitation of the Air Ministry for experienced staffs to

transfer; and whether he will take steps to ensure that the experience of the officers in his Department is made available to the State during the present period of rearmament by employing them upon work commensurate with their experience in the War Office or permitting them to transfer to other Departments requiring experienced staffs?

The Secretary of State for War (Mr. Duff Cooper): Owing to the extreme pressure of work at the War Office and the difficulty of securing trained staff at the present time, it is necessary to impose a strict limitation on the transfer of experienced officers. The grading of the clerical posts at the War Office is continuously under review, and active consideration is now being given to it.

Mr. Banfield: Does the right hon. Gentleman recognise the necessity for coordination between the different Departments and the staff?

Mr. Cooper: Certainly.

Mr. McEntee: asked the Secretary of State for War whether he is aware that, as a consequence of the undergrading of work in his Department and the employment of experienced officers upon duties carrying responsibilities in excess of those appropriate to their grade, promotion opportunities in the War Office are less favourable than in the other Defence Ministries; and whether he will take steps to relieve the situation as far as possible by ensuring that posts are filled by officers of appropriate grading?

Mr. Cooper: The grading of the clerical posts at the War Office is continuously under review and is under active consideration at the present time.

Mr. McEntee: In view of the delay in filling the higher posts, the duties of which are now being carried out by lower-paid officers, and the unfairness of it, will the right hon. Gentleman speed up the filling of these posts by lower-paid officers, so that they may get the salaries appropriate to those higher posts?

Oral Answers to Questions — BRITISH ARMY.

DISCHARGED SOLDIER (GRATUITY).

Mr. George Griffiths: asked the Secretary of State for War whether he is aware


that E. A. Wareham, No. 6,912,364, was discharged from the Rifle Brigade suffering from tuberculosis; that there is no trace of tuberculosis in the soldier's family; whether he received any treatment for the disease; and whether the man received a pension or a gratuity?

Mr. Cooper: Yes, Sir. Mr. Wareham's case received thorough investigation and treatment, including surgical treatment which effected a considerable improvement in his condition. He received a gratuity of £18 on his discharge from the Army. I regret that as his disability was not caused by his service, he is not eligible for a pension.

Mr. Griffiths: Is it not a fact that he was a sound man when he went into the Army and had no trace of tuberculosis, and that he contracted it in the Army?

Mr. Cooper: That does not show that it was due to service.

Mr. Morgan Jones: Seeing that there are so many of these cases, will the right hon. Gentleman provide some sort of court of appeal to which these cases might be referred rather than having the final decision laid down at the War Office?

Mr. Cooper: It is laid down by the medical advisers of the War Office who look into the case. The only court of appeal would be another medical board. I am prepared to consider it, but I do not see that it would serve any useful purpose by having an appeal from one medical board to another.

Mr. Jones: Is it not the case that it is the certificate of the doctors themselves that is very much questioned, and is it not possible to have an appeal to a board half civil and half medical?

Mr. Cooper: I am prepared to consider it, but I cannot see that a civil board could give valuable advice as to the origin of a disease.

Mr. G. Griffiths: Will the right hon. Gentleman reconsider this man's case, seeing that it is so glaring?

RECRUITS.

Mr. Drewe: asked the Secretary of State for War whether in view of the present shortage of recruits, he will

amend the regulations to permit a man serving in the Army Reserve to re-enlist in the Regular Army if he so desires?

Mr. Cooper: I have had this proposal under consideration, but as the purpose of the Army Reserve is to bring units up to war establishment on mobilisation I doubt whether it is desirable to deplete it in order to increase the number of men serving with the Colours.

Mr. Day: asked the Secretary of State for War the number of recruits for the Regular Army who have been finally approved during the 12 months ended to the last convenient date, and the figures for the comparable 12 months prior; and whether the establishment is now on a satisfactory basis?

Mr. Cooper: In the year ended 31st March, 1937, 22,802 recruits were finally approved for the Regular Army as compared with 23,298 for the previous year. With regard to the last part of the question, it will be necessary to recruit approximately 50,000 men if establishment is to be reached by the end of the year.

Mr. Day: Are there many recruits still awaiting their final medical examination?

Mr. Thorne: What does the right hon. Gentleman intend to do between now and the end of the year to get the 50,000 men he needs?

Mr. Cooper: The hon. Member knows of the reforms that are being introduced with a view to making the Army more attractive.

Mr. Paling: In view of the shortage of men, is the right hon. Gentleman determined to change his policy of trying to fill the Army by frightening people out of their wits?

TROOPSHIPS.

Mr. Bernays: asked the Secretary of State for War whether the inquiry into the measures to be taken to improve the conditions in troopships is now completed; and, if so, will he state what changes he intends to make?

Mr. Cooper: It has recently been decided to increase troopdeck space on the older vessels to accord with that on the latest built troopship, and to increase the


washing facilities, while an improved system of ventilation is being installed in a troopship now under construction. Additional improvements are at present under review.

CASUALTIES, NORTH-WEST FRONTIER.

Sir William Davison: asked the Secretary of State for War whether he is aware that the parents of one of the British officers who lost their lives in the recent fighting on the North-West Frontier of India learnt for the first time of the death of their son when listening-in to the British Broadcasting Corporation wireless news on the evening of Sunday, the 11th instant, and only received an official telegram from the War Office at lunch time on the 12th instant; and whether steps will be taken in future to prevent the broadcasting of casualties of this kind until the War Office are satisfied that the relatives have first been apprised of their bereavement?

Mr. Grant-Ferris: asked the Secretary of State for War (1) why the official intimation of the death of one of the British officers killed in the recent operations on the North-West Frontier was only made 24 hours after it had been broadcast;
(2) why the names of the British officers killed in the recent operations on the North-West Frontier of India were available for broadcasting, and were in fact broadcast on Sunday evening, 11th April, when in one case at any rate the next-of-kin had not been notified; and whether he will take steps to ensure that the first intimation of a death in action should be made to the next-of-kin?

Mr. Cooper: I deeply regret the distress caused to the relatives of the officers concerned by reason of the failure to notify them direct in advance of the general announcement. I can assure my hon. Friends that every effort is made to send to the next-of-kin prompt notification of all casualties occurring to British officers and men. It is important, however, that, when news that fighting has taken place and casualties have occurred appears in the public Press, an early announcement should be made in order to allay the natural anxiety of everybody who has a relative or a friend in the

units involved. In this case the Press announcement that fighting had taken place appeared on Saturday, 10th April. The responsibility for notifying the next-of-kin in this country of casualties to British Service officers rests with the War Office, which has, however, to rely on the unit for particulars of the names and addresses of the next-of-kin concerned. On Sunday morning, 11th April, the War Office was notified of the names of two British Service officers who had been killed, and one who had been wounded, in recent fighting in Waziristan. The names and addresses of the next-of-kin were, however, not included in the telegram (and were indeed not received until 15th April). Meanwhile a cable was received from India, on the afternoon of 11th April stating that the next-of-kin of the officers concerned had been informed, and in these circumstances no steps were taken to delay the public announcement of the names of the casualties which the British Broadcasting Corporation had been asked to publish in their evening bulletin.

Sir W. Davison: While thanking the right hon. Gentleman for saying that he will take steps in the future, may I ask whether he is aware that not long ago a similar case occurred where a mother heard about the death of her soldier son when reading an evening newspaper? Will he do everything in his power to see that painful incidents of this kind are prevented in the future as far as possible?

Mr. Cooper: I was not aware of that particular case, and if the hon. Gentleman will give me information I will look into the matter. I can assure him that every step will be taken to prevent the recurrence of such incidents.

ASSISTANCE TO CIVIL COMMUNITY.

Mr. C. Wilson: asked the Secretary of State for War whether he can give for each of the last five years the number and character of the men employed in cases where, in this country, the military authorities gave assistance to the civil community?

Mr. Cooper: I regret that the information is not available.

Oral Answers to Questions — ISLE OF GRAIN (WATER SUPPLY).

Sir Irving Albery: asked the Secretary of State for War whether he can now give an answer to the Strood Rural District Council concerning proposals for an improved water supply to the Isle of Grain; and whether he is aware that this matter has now been held in suspense since July last?

Mr. Cooper: I regret that it has not yet been possible to communicate with the Strood Rural District Council on this subject, but an answer is necessarily delayed until the terms on which the War Department could free itself from an obligation now laid upon it to supply water from its own pumping plant to a farm on the Isle of Grain have been settled. This question is under active consideration at the present time, and I will communicate with my hon. Friend when a decision is reached.

Sir I. Albery: In view of the long delay which has occurred, will the right hon. Gentleman do everything possible to expedite the matter?

Oral Answers to Questions — BRITISH LEGION (REVIEW).

Mr. Orr-Ewing: asked the Secretary of State for War whether he has considered the criticisms to which his attention has been called which have been made at meetings of branches of the British Legion concerning the review of the British Legion in June; and whether he can make any statement about the arrangements for this review?

Mr. Cooper: Transport difficulties have necessitated a reconsideration of a proposal to hold this review at Sandown Park, and discussions are proceeding between the authorities concerned and the British Legion for a revision of the scheme. I hope to be in a position to make an announcement very shortly.

Mr. Orr-Ewing: Will the right hon. Gentleman make it quite clear, in order to avoid any further misunderstanding, that at no time either this year or last year was permission granted to hold such a review in Hyde Park?

Mr. Cooper: Permission has never been granted.

Oral Answers to Questions — SCOTLAND.

SMALLHOLDINGS.

Mr. R. Gibson: asked the Secretary of State for Scotland if he has considered the serious rating hardships to which those smallholders are exposed in Scotland who have had to build on their holdings houses on which they have at present to pay both owners' and tenants' rates, resulting in a payment of rates in some cases equal to or more than six times the rent of the holdings; whether he will consider, in the case of such smallholdings let by the Department of Agriculture, the re-letting of the holding and the house as a unum quid to the smallholder; and whether he has any statement to make generally regarding the removal of this type of rating hardship?

The Secretary of State for Scotland (Mr. Elliot): I regret I am unable to add to the reply which I gave to the hon. Member for the Western Isles (Mr. M. MacMillan) on 16th February, of which I am sending the hon. and learned Member a copy.

Mr. Gibson: asked the Secretary of State for Scotland how many smallholdings there are within five miles of the boundary of Greenock; what extent of land within that area is suitable for smallholdings; and what steps he proposes to take to make such land available for smallholdings?

Mr. Elliot: There are approximately 70 holdings of 50 acres or less in extent within the area indicated. With regard to the remaining parts of the question, I would refer to the reply I gave to a similar question by the hon. and learned Member on 29th January last.

Mr. Gibson: Can the right hon. Gentleman say whether these smallholdings are under the Smallholders (Scotland) Act, and whether the smallholders have the right of security of tenure and a fair rent?

Mr. Elliot: I understand that is so.

HOUSING (BUILDING MATERIALS).

Mr. Mathers: asked the Secretary of State for Scotland whether he is taking any steps to check the rise in the price of materials used in house building; and whether he proposes to increase the Gov-


ernment housing subsidy to meet the new position?

Mr. Elliot: I would refer the hon. Member to the full statement I made on the question of housing subsidies in reply to his question on 23rd March and to my reply to the question asked on 13th April by the right hon. Gentleman the Member for West Stirling (Mr. Johnston) regarding the price of building materials.

Mr. Mathers: Is the right hon. Gentleman aware of the desirability of adopting the first of these two alternatives, and does he realise that the rise in the cost of materials used in house building is causing a serious setback to house building in the county of West Lothian, where a big programme has been undertaken?

Mr. Elliot: Yes, Sir, I am aware of the desirability of adopting the first course rather than the second. As I have explained in previous answers, a rise in prices very often brings forth a larger supply of materials, and that itself checks a further rise.

HERRING INDUSTRY BOARD.

Mr. Boothby: asked the Secretary of State for Scotland whether he has now obtained information from the Herring Industry Board regarding the adequacy of their statutory powers; and whether he contemplates making any changes in the personnel of the board?

Mr. Elliot: Certain proposals which have been received from the Herring Industry Board for extension of their powers and which would require legislation are at present receiving my consideration in consultation with the other Ministers concerned. The reply to the second part of the question is in the negative.

Mr. Boothby: When does the right hon. Gentleman expect to be in a position to announce the policy of the Government in this matter, and does he propose to undertake fresh legislation?

Mr. Elliot: That depends on the programme of business in the House.

Mr. Boothby: asked the Secretary of State for Scotland whether he is aware that the interest charges proposed by the Herring Industry Board in their latest

loan scheme are so high as to make it practically impossible for the fishermen to take advantage of it; and whether he proposes to take any action in the matter?

Mr. Elliot: I do not think that it can be claimed that 3¾ per cent. is an excessive rate of interest, or that it should prevent fishermen from taking advantage of the loan scheme. The last part of the question does not, therefore, arise.

PHYSICAL TRAINING (ADVISORY COUNCIL).

Mr. Kennedy: asked the Secretary of State for Scotland whether he has considered a resolution adopted and sent to him by the Kirkcaldy Insurance Committee complaining that no representative of National Health Insurance Committees is included in the list of members who are to be responsible for the organisation of the work of the National Advisory Council for Physical Training and Recreation for Scotland; and whether this omission can now be rectified?

Mr. Elliot: The answer to the first part of the question is in the affirmative. With regard to the second part, the members of the council were appointed because of their personal qualifications and not as representatives of particular organisations. It is not at present proposed to add to their number, but in the event of further appointments being made the possibility of adding a member with special knowledge of National Health Insurance work will be kept in view.

Mr. J. J. Davidson: Is this Advisory Board appointed by the Minister himself?

Mr. Elliot: It is appointed by the Prime Minister.

Mr. Davidson: Can an opportunity be given to various Scottish organisations to make representations to the Prime Minister with a view to altering this advisory body?

Mr. Elliot: If any representations are made to me I will certainly consult the Prime Minister.

PRISONERS.

Mr. Maxton: asked the Secretary of State for Scotland how many prisoners are undergoing periods of preventive detention in Scottish prisons?

Mr. Elliot: There are no prisoners undergoing preventive detention in Scottish prisons.

Mr. MacLaren: Why not?

Mr. Maxton: Has this legislation now become a dead letter?

Mr. Elliot: No, Sir.

Mr. Maxton: asked the Secretary of State for Scotland why prisoners undergoing sentence in Edinburgh prison are compelled to work longer hours than those in the prison of Glasgow?

Mr. Elliot: The hours worked in Edinburgh prison are not regarded as excessive looking to the interests of the prisoners themselves. Steps are to be taken in the near future to introduce a working day of similar length at Barlinnie as part of a scheme of improvement of conditions generally.

Mr. Maxton: Is there any truth in the public stow that these additional hours are due to the larger number of orders which have to be overtaken by the prison?

Mr. Elliot: I think not.

Mr. McGovern: Is any allowance made by the Trades Union Council with a view to getting an eight-hour day?

UNIVERSITIES (GRANT, COMMITTEE).

Mr. G. A. Morrison: asked the Secretary of State for Scotland whether he is now in a position to make any statement about the application submitted by the four Scottish universities for a grant from the Education (Scotland) Fund?

Mr. Elliot: Yes, Sir. I have decided to appoint a committee in terms of Section 16 (1) (b) of the Education (Scotland) Act, 1908, to inquire into the application made by the University Courts of the Universities of Scotland for the payment from the Education (Scotland) Fund of sums in respect of yearly maintenance expenditure and to advise me as to the sums, if any, which should be paid to them. The chairman of the committee will be Lord Alness, and Sir Arthur Rose, Bart., and Sir George Macdonald will be the other members.

FORESTRY WORKERS (WAGES).

Mr. T. Johnston: asked the hon. and gallant Member for Rye (Sir G.

Courthope), as representing the Forestry Commissioners, whether he is aware that nearly six months have elapsed since an application was lodged by the Scottish Forestry Section of the Transport and General Workers Union, with the Assistant Commissioner for Scotland of the Forestry Commission, for an alteration in wages and conditions of forestry workers in Scotland; what is the cause of the delay in dealing with the application; and when the workers' representatives may expect a decision?

Colonel Sir George Courthope (Forestry Commissioner): The Forestry Commissioners have been making a close inquiry regarding the wages of workers comparable to forest workers in their employment and decisions will be shortly announced.

Mr. Davidson: Can the hon. Gentleman indicate when we can have a definite statement?

Sir G. Courthope: No. I cannot do anything except say that the matter is being considered by a committee under the chairmanship of Mr. Walter Smith, and that the House may be sure that there will be no undue delay.

Mr. Price: Will the commission bear in mind that in many districts the wages of agricultural employés are higher than those paid by the Forestry Commission?

Sir G. Courthope: The Forestry Commission will bear in mind all relevant considerations.

Oral Answers to Questions — TIN AND LEAD MINES, GREAT BRITAIN.

Mr. Ellis Smith: asked the Secretary for Mines whether he will take steps to revive the tin mine workings in Great Britain?

The Secretary for Mines (Captain Crookshank): If the hon. Member has in mind financial assistance, the answer is that I have no funds. If there is any other direction in which he thinks that my Department could be of assistance, perhaps he will let me know.

Mr. Smith: Is the hon. and gallant Gentleman aware that some tin mining companies continue to pay dividends after


they have closed the mines, and, in view of the financial position, is it not the duty of his Department to do something in this matter?

Lieut.-Commander Agnew: Has the Department considered the desirability of recommending the Government that a guaranteed price should be given for tin worked and produced in Great Britain over a period of years?

Captain Crookshank: Suggestions have been made in various quarters in that direction and have been considered. The price of tin is clearly dependent in the main on the maintenance of international control, and that is the principle which the Government have supported since its inception.

Mr. E. Smith: asked the Secretary for Mines whether he will take steps to revive the lead workings throughout the country and remove all pre-mining charges in the industry?

Captain Crookshank: I am not clear as to what steps the hon. Member has in mind, but I would refer him to the answer given by the Minister for the Co-ordination of Defence to a question by the hon. Member for Barnard Castle (Mr. Sexton) on 22nd March, of which I am sending him a copy.

Mr. G. Hardie: Has any consideration been given by the Mines Department to the lead mines at Leadhills, in Scotland, and is there any possibility of reviving this industry in that area?

Captain Crookshank: Perhaps the hon. Member will look at the answer to which I have referred.

Oral Answers to Questions — COAL INDUSTRY.

AUTOMATIC FIREDAMP DETECTORS.

Mr. T. Williams: asked the Secretary for Mines whether he has yet received an interim report from the committee who are watching the progress of automatic firedamp detectors in mines; and, if so, has he any statement to make?

Captain Crookshank: No, Sir. I understand that at their first meeting on 16th January, the committee agreed that the inquiry upon which they were engaged could not readily be divided into sections

so as to permit of the presentation of an interim report.

Mr. Williams: When does the hon. and gallant Gentleman expect to get this report, or a report of any kind?

Captain Crookshank: I have just said that I do not expect an interim report, but the committee are well aware of the urgency of the problem.

Mr. Williams: Have the committee given the hon. and gallant Gentleman any information as to the number of automatic detectors in use in each county, or any information of that kind?

Captain Crookshank: I have said that I have had no report from them. They are considering the matter.

EXPLOSIONS.

Mr. James Griffiths: asked the Secretary for Mines the number of collieries at which ignitions of firedamp have taken place in each year since 1920; and what number of collieries at which such ignitions have occurred used coal-cutting and/or conveying machines driven by electrical power?

Captain Crookshank: With the hon. Member's permission, I will circulate in the OFFICIAL REPORT a statement showing the number of explosions of firedamp and coal dust involving death or personal injury and the number of these attributed to the use of electricity, which I hope will serve his purpose.

Following is the statement:


Explosions of Firedamp or Coal Dust at Mines under the Coal Mines Act.


Year.
Number of separate accidents involving death or injury.
Number of separate accidents attributed to the use of electricity.


1920
…
91
1


1921
…
51
1


1922
…
82
3


1923
…
81
4


1924
…
95
2


1925
…
82
3


1926
…
40
1


1927
…
72
2


1928
…
48
4


1929
…
68
2


1930
…
62
3


1931
…
49
3


1932
…
50
1


1933
…
41
1


1934
…
47
6


1935
…
37
3


1936
…
40
5

Mr. Griffiths: asked the Secretary for Mines whether he will publish the report of the investigators sent to examine the comparative immunity of the French coal mines from explosion; and whether he will make copies of their report available to the House?

Captain Crookshank: Yes, Sir, as at present advised, and provided the French Government raise no objection.

Mr. Griffiths: Does the hon. and gallant Gentleman propose that members of the Royal Commission shall have a report of this investigation available before they complete their report, or will an opportunity be given to members of the Royal Commission to visit French mines themselves?

Captain Crookshank: The Royal Commission, of course, govern their own procedure, but any information which is at my disposal is at their's also.

OIL EXTRACTION.

Sir Hugh Seely: asked the Secretary for Mines whether Imperial Chemical Industries, Limited, have any obligation to furnish the Government with reports on the progress of the Billingham coal-oil plant; whether such information is in fact supplied; and whether his Department is at liberty to publish it to Members of this House?

Captain Crookshank: The answer to the first part of the question is in the negative. As regards the second and third parts, certain information has been supplied to the Government and from time to time particulars have been given in Parliament of the progress made by reference to the production obtained. I am not at liberty to publish other information, which has been furnished in confidence.

Mr. Day: asked the Secretary for Mines particulars of the amount of State assistance that has been given to date for the purpose of extraction of oil from coal in low-temperature or other carbonisation process; and whether he is in a position to make a statement as to the productive results of the experiments with the object of reducing these propositions to a commercial basis?

Captain Crookshank: Motor spirit produced from coal has enjoyed a preference

since the imposition of the duty on imported motor spirit in April, 1928. During 1933 to 1935, the last three years for which information is available, the quantity of motor spirit obtained by the high and low temperature carbonisation of coal was about 116,000,000 gallons. The amount of the duty at 8d. per gallon payable on this quantity of imported spirit would be about £3,900,000. As regards the second part of the question, I would refer the hon. Member to the reply which I gave yesterday to a question by the hon. Member for Aberdare (Mr. G. Hall).

Mr. Day: Are these experiments still under the supervision of the Fuel Research Board?

Captain Crookshank: The Fuel Research Board naturally watches everything that is going on. I do not know what the hon. Member means.

SAFETY CLASSES.

Mr. T. Smith: asked the Secretary for Mines what progress is being made in the various districts with regard to safety-first classes for young persons employed in the mining industry?

Captain Crookshank: The number of boys enrolled in the new session of safety classes which opened last autumn was a little over 10,000, and the number of classes over 400. I will send the hon. Member figures for the different coalfields.

HARWORTH COLLIERY DISPUTE.

Mr. Bellenger: asked the Secretary for Mines whether he has had any further negotiations with the Nottinghamshire coalowners with a view to finding a conciliatory solution to the Harworth dispute; and whether he has any additional information to give the House as to the present situation in that area?

Captain Crookshank: I have at present nothing to add to the statement I made last Tuesday.

Mr. Bellenger: May I ask whether the Secretary for Mines agrees with the view held in many responsible quarters that a speedy settlement of this trouble would be secured by a more reasonable attitude on the part of the colliery owners? Has the hon. and gallant Gentleman exhausted all methods of conciliation?

Captain Crookshank: I have said nothing about having exhausted my efforts. If the hon. Member refers to what I said, he will find that I said I should continue to do all in my power to find a solution of the trouble.

Mr. T. Williams: Has the hon. and gallant Gentleman had any communication with the Miners' Federation of Great Britain recently?

Captain Crookshank: I do not think that any useful purpose would be served by explaining with whom I have been in contact, but I will say that I have not lost touch with either side.

SUPPLIES (GLASGOW CORPORATION).

Mr. Hardie: asked the Secretary for Mines whether he is aware that the Glasgow Corporation sewage department invited tenders for the annual supplies of coal for the next 12 months and did not receive a single offer; and what action he intends to take to compel the coalowners to supply the undertaking with all its requirements in view of the importance of the service to the sanitation and health of the community?

Captain Crookshank: I understand that the reason for the delay in making offers to the Glasgow Corporation sewage department in respect of a future contract for the supply of coal is that the colliery owners take exception to a clause in the contract form prepared by the corporation. The matter is under discussion between the parties. There is no question of the sewage department being without supplies of coal.

Mr. Hardie: Is the clause a preventive one?

Captain Crookshank: I do not know what the clause is. The matter is being discussed between the people who are concerned, and not with me.

Mr. Hardie: Have not the Mines Department same say in contracts such as this, especially when the sanitation of the city is being held up by some dispute? Ought not the Mines Department to do their part?

Captain Crookshank: We do our part wherever it is necessary, but I cannot be expected to deal with the clauses of every contract throughout the country.

Oral Answers to Questions — SOUTHERN RHODESIA.

NATIVE REGISTRATION ACT.

Mr. Paling: asked the Secretary of State for Dominion Affairs whether any amendment of the Southern Rhodesia Native Registration Act is under contemplation?

The Secretary of State for Dominion Affairs (Mr. Malcolmn MacDonald): I am informed by the Southern Rhodesian Government that no amendment of the Act is contemplated.

Mr. Paling: Is the right hon. Gentleman aware that when this Act was going through the House, the Prime Minister admitted that unless certain sections were worked administratively with the greatest sympathy, they would cause hardship to the natives concerned? What is being done in that direction in view of that statement?

Mr. MacDonald: I assured the House last week that the Prime Minister had been given an assurance by the Minister of Justice that the Sections of the Act would be administered as sympathetically as possible.

Mr. Paling: Is the right hon. Gentleman aware that all the people in Southern Rhodesia who know anything about the matter are up in arms about this?

Mr. MacDonald: I know of nothing of the sort.

TOBACCO (IMPORTS, GREAT BRITAIN).

Mr. Lyons: asked the Secretary of State for Dominion Affairs the value of tobacco imported from Southern Rhodesia into this country for the year ended 31st March, 1937, or nearest convenient date; and whether he will consider the introduction of a tobacco quota to implement inter-Empire trade?

Mr. M. MacDonald: The value of un-manufactured tobacco, stripped and un-stripped, imported into the United Kingdom from Southern Rhodesia in the 12 months ended 31st March, 1937, was £602,831. I should see great difficulty as regards the suggestion made in the second part of my hon. and learned Friend's question. I would remind him that tobacco grown within the Empire receives a preference of over 2s. per lb. on importation into the United Kingdom.

Mr. Lunn: In view of the preference given to Empire tobacco, is the right hon. Gentleman taking any steps to see that the quality is improved?

Mr. MacDonald: I think the best tribute that can be paid to the quality of Empire tobacco is the fact that during the last dozen years the consumption of it has gone up by more than three times.

Oral Answers to Questions — MERCANTILE MARINE (OFFICERS AND MEN).

Miss Ward: asked the President of the Board of Trade what specific advantages officers and men in the mercantile marine now enjoy compared with 1914?

The Parliamentary Secretary to the Board of Trade (Dr. Burgin): Substantial improvements have been made in conditions of employment at sea since 1914. Among the more important of these may be mentioned: considerable increases in rates of pay for both officers and men; the regulation of hours of work and the grant of railway fares on discharge to ratings; the grant of annual leave with pay to officers; and improvements in the standard of accommodation for both officers and men, particularly in ships built recently. Most of these improvements have been brought about by agreement between owners and seamen through the medium of the National Maritime Board, the successful working of which may perhaps be regarded as the greatest single benefit which the industry now enjoys as compared with 1914.

Miss Ward: Are these agreements compulsory on all companies?

Dr. Burgin: Perhaps the hon. Lady will put that question on the Paper.

Mr. Davidson: Why did not the hon. Gentleman include the new rest camp established for the mercantile marine outside Bilbao?

Miss Ward: asked the President of the Board of Trade the number of officers and men employed in the mercantile marine in 1914 and in 1936, and the comparable rates of wages for officers, engineers, and crews?

Dr. Burgin: As the number of seamen employed on British ships is ascertained only when a census of seamen is taken I can only give the figures to the nearest

available date. The numbers employed on sea-trading vessels registered at ports in the United Kingdom were 38,162 officers and 170,052 seamen on 3rd April, 1911, and 25,901 officers and 126,892 seamen on 15th June, 1935. There were no national rates of wages in 1914 and a convenient comparison between 1914 and 1936 is, therefore, impracticable. I am sending my hon. Friend a copy of the National Maritime Board Year Book for 1936, containing wage rates.

Mr. G. Griffiths: Could the hon. Gentleman tell us how many of these are British sailors?

Miss Ward: asked the President of the Board of Trade whether, in order to ensure as good working conditions as possible in the Mercantile Marine, he will consider promoting an investigation into stoke-hole conditions?

Dr. Burgin: Consideration of working conditions in the stokehold is primarily a matter for the appropriate Panel of the National Maritime Board. I know of no ground for promoting a special investigation into them.

Viscountess Astor: If I brought cases to the hon. Gentleman's notice, would he consider them?

Dr. Burgin: Certainly.

Oral Answers to Questions — TRADE AND COMMERCE.

IRON AND STEEL (PRODUCTION, SCOTLAND).

Mr. Hardie: asked the President of the Board of Trade whether he is aware that there are blast furnaces at Wishaw, Glengarnock, and Coatbridge, numbering 12 in all, which are capable of being reconditioned for the production of pig-iron at an early date; and will he, in view of the shortage of iron and steel in Scotland, consider the advisability of taking action to compel the Iron and Steel Trades Federation to remove the restrictions on output so that the furnaces mentioned can resume operations?

Dr. Burgin: I am informed that the British Iron and Steel Federation have placed no restrictions on the production of iron and steel. The industry are at present investigating the possibility of bringing further blast furnaces into operation in Scotland.

Mr. Hardie: Is it not a restriction not to have the furnaces in a condition for production when they are required?

Dr. Burgin: A number of the furnaces require a great deal of modernisation. It is a question whether it is better to bring those into operation, or to build new ones.

Mr. Hardie: Is it not the function of the federation, which has all these privileges about trade, to see that the machinery is ready to operate when it is required?

Dr. Burgin: No, Sir.

Mr. Hardie: It is.

Mr. Hardie: asked the President of the Board of Trade whether he is aware that the restriction on the output of iron and steel in Scotland has thrown a large number of workers out of employment because of the lack of materials; and, as production and prices and profits are regulated by the Iron and Steel Trades Federation, what action does he intend to take to prevent this employers' monopoly making excessive profits at the expense of the general industry of Scotland?

Dr. Burgin: I am informed that production in Scotland of pig iron and steel ingots and castings increased considerably in March, and that every effort is being made to increase production still further. As the hon. Member is aware prices of the main iron and steel products are determined by the British Iron and Steel Federation in consultation with the Import Duties Advisory Committee.

Mr. Hardie: Does what the Minister has just said refer to any purchases made by those called steel and iron merchants, and, if so, is there any control over prices in this department?

Dr. Burgin: Perhaps the hon. Member will put that question on the Paper.

COTTON INDUSTRY.

Mr. Chorlton: asked the President of the Board of Trade whether he will give the figures illustrating the increase in the United States of the cotton trade; whether the figures are a new high record; and how they compare with the figures of this country?

Dr. Burgin: As regards the first and third parts of the question, I will, with my hon. Friend's permission, circulate in the OFFICIAL REPORT some comparable particulars for each of the years ended 31st January, 1930 and 1935 to 1937. As regards the second part, the consumption of cotton in mills in the United States in the latest year was exceeded by that in the year ended 31st January, 1928.

Following are the particulars:

Table showing the quantity of cotton consumed in mills in the United States and Great Britain in the periods shown, according to statistics compiled by the International Federation of Master Cotton Spinners' and Manufacturers' Associations.

Year ended 31st January.
United States.
Great Britain.





'000 Bales.
'000 Bales.


1930
…
…
6,904
2,775


1935
…
…
5,424
2,449


1936
…
…
5,661
2,604


1937
…
…
7,172
2,781

TRADE AGREEMENTS.

Mr. Chorlton: asked the President of the Board of Trade what is the present position relative to the trade agreements with Denmark, Sweden, Norway, and Finland, and to their renewal?

Dr. Burgin: The agreements continue in force without renewal, subject to termination after four months' notice in the case of that with Denmark and six months' notice in the case of the others. My hon. Friend will appreciate that it is unnecessary and usually undesirable to give notice of termination of a trade agreement before negotiating its revision.

Sir Gifford Fox: Will my hon. Friend give an assurance that in the event of the trade agreement with Denmark being renewed, the position of poultry producers will be safeguarded?

DENMARK.

Mr. R. C. Morrison: asked the President of the Board of Trade whether he can make any statement on the conversations as regards trade policy with the Prime Minister of Denmark; and whether any steps were agreed upon to increase the amount of goods from Denmark which might be exported to this country?

Dr. Burgin: Trade matters were only referred to in a general and incidental manner as part of the exchange of views which took place during the recent brief visit of the Danish Prime Minister. The answer to the last part of the question is in the negative.

DUMPING.

Mr. Day: asked the President of the Board of Trade the dates and particulars of the last report he received from the economic committee of the League of Nations with regard to the practice of the various forms of dumping, especially that encouraged by State intervention?

Dr. Burgin: I understand that the Economic Committee considered this subject some years ago, but issued no report on it.

BACON (IMPORTS).

Mr. Groves: asked the President of the Board of Trade in view of the danger of a bacon shortage in this country owing to the poor results shown by the pig marketing scheme, whether he will take steps to increase the quota from Denmark?

Dr. Burgin: At the moment I do not understand that any increase in bacon imports is required, but the supply position is kept under constant review and allocations to foreign countries are adjusted from time to time as found necessary.

Oral Answers to Questions — PALESTINE.

ROYAL COMMISSION'S REPORT.

Mr. Mander: asked the Prime Minister whether he will give an assurance that the report of the Royal Commission on Palestine will be made available to Members of this House in priority to any other bodies or persons outside the Cabinet?

The Prime Minister (Mr. Baldwin): The hon. Member will realise that when the report of the Royal Commission on Palestine is received it must be made available in strict confidence not only to Members of the Cabinet but to various officials, but I can assure him that, in accordance with the usual practice, the report will be made available to Members of this House immediately on publication.

Mr. T. Williams: Are copies of the report likely to be made available to hon. Members before the Government have definitely reached their conclusion?

The Prime Minister: I shall be glad to have notice of that, but I think the answer is "Yes." Perhaps the hon. Member will put the question on the Paper. The report will be issued immediately.

ASSISTANT POLICE SUPERINTENDENT (MURDER).

Mr. Creech Jones: asked the Secretary of State for the Colonies whether he can make a statement regarding the assassination on Thursday last of Halim Basta, captain of the Arab section of the Palestine police?

The Secretary of State for the Colonies (Mr. Ormsby-Gore): I have learned with great regret from the High Commissioner for Palestine that Halim Basta, an assistant superintendent of police, Criminal Investigation Department, was shot dead in Haifa in the afternoon of 15th April, by three Arabs armed with pistols. His orderly was seriously wounded and has since died. The High Commissioner has further reported that a reward has been offered, but that no arrests have yet been made. The identity of the murderers is unknown, but several persons who are suspected of being members of a local terrorist gang which is believed to be implicated, are known to be on the run. Halim Basta had been working to bring this gang to justice.

Oral Answers to Questions — MARRIAGE BILL.

Mr. Thurtle: asked the Prime Minister whether, in view of the urgent need for the reforms embodied in the Marriage Bill and the large majority which it commands in the House, he will see that adequate Parliamentary time is provided for the completion of the remaining stages of this Measure?

The Prime Minister: As the hon. Member is no doubt aware, the Marriage Bill is third Order on Friday, and I imagine that there will be time on that day for the consideration of all three Bills. I would remind the hon. Member that Friday, 30th April, is also available for consideration of Private Members' Bills.

Mr. Thurtle: Will the Prime Minister bear in mind, in the event of his having to come to a decision on this matter, that there is a strong and widespread feeling in the country that these reforms ought to become law?

Mr. Thorne: May I ask the Prime Minister whether he will advise his people behind him to stop any manoeuvring to prevent the Bill passing on Friday?

The Prime Minister: My answer must be that hon. Members know I have refused to answer hypothetical questions for 20 years, and I am not going to begin this week.

Mr. Crowder: Is my right hon. Friend aware that there were no more than 200 Members in the House last Friday?

Oral Answers to Questions — THE CORONATION.

Mr. Smedley Crooke: asked the Lord President of the Council whether his attention has been drawn to the disappointment felt by the women's section of the British Legion that no seats to view the Coronation procession have been allotted to them; and whether, in view of this and the national importance of this section of the community comprising, as it does, the widows, wives, mothers, orphans, and dependants of those who served and died for their country, he will take steps to remedy this grievance?

The Lord President of the Council (Mr. Ramsay MacDonald): The hon. Member appears to be misinformed as to the position. Allocation of seats have been made both to the widows and mothers of officers and men who fell in action or died of war service while in His Majesty's Forces, and also to the Women's Section of the British Legion and to the Women's Section of the British Legion, Scotland. An announcement recently appeared in the Press giving information to widows and mothers of officers and men desiring to apply. I can assure my hon. Friend that we are doing everything that is practicable to provide these seats. I cannot add anything further in answer to the question; but if the hon. Member has any further suggestions to make, I should be very glad if he would be good enough to communicate with me.

Mr. Emery: asked the Minister of Pensions whether, in view of the special Coronation grants which are to be made to the registered unemployed, he will arrange for a similar award to be given to the war-disabled men who are not registered for employment owing to their inability to work in normal industry?

The Minister of Pensions (Mr. Ramsbotham): I have no power under the Pensions Warrants or Statutes to authorise the grants suggested by my hon. Friend.

Oral Answers to Questions — INCOME TAX.

Mr. Peat: asked the Chancellor of the Exchequer whether he is aware that the discount of 2½ per cent. on Income Tax paid before the due date is refused if no request for such discount is made at the time of payment, even though such a request for discount be received a few days after the payment of the tax; and whether this is the general practice?

The Financial Secretary to the Treasury (Lieut.-Colonel Colville): Section 159 of the Income Tax Act, 1918, which authorises the allowance of discount on prepayment of tax under Schedule D, expressly provides that the allowance is to be made only on request made at the time of payment. I regret, therefore, that the Inland Revenue authorities have no power to allow discount where it has not been claimed at the time of payment.

Mr. Peat: Will not my right hon. and gallant Friend's Department take some action to bring their methods more into line with ordinary business and common sense?

Lieut.-Colonel Colville: I cannot give any undertaking. The terms of the Act are clear.

Mr. Thorne: Would it not pay the Treasury to give a discount for prompt payment?

Captain Harold Balfour: Will the Revenue authorities, when they receive payment in advance, draw the attention of the person making the payment, before accepting it formally, to the fact that, if he wishes, 2½ per cent, discount is available if he makes a proper application?

Lieut.-Colonel Colville: I will note the suggestion, but the original question was one of fact, and I have answered it.

Oral Answers to Questions — COMMODITY PRICES.

Major Stourton: asked the Chancellor of the Exchequer whether he is aware that the present cheap rates for money are increasing the price of materials and adding to the cost of rearmament; and whether, in order that the general taxpayer may not suffer on balance, he will re-examine the effects of artificially cheap money causing a rise in the commodity index number?

Lieut.-Colonel Colville: I would refer my hon. and gallant Friend to the reply which I gave to the hon. Member for Evesham (Mr. De la Bère) on 12th April.

Mr. Boothby: Is it not a fact that, if the depreciation of currencies is taken into account, the present commodity price level is nearly 50 per cent. below that of 1927?

Major Stourton: asked the Chancellor of the Exchequer whether, in view of the fact that the wholesale commodity sterling price index is to-day 7 per cent. higher than the index for the whole period 1844 to 1913, he will take precautionary steps to ward off a repetition of the calamities which have hitherto followed high commodity prices causing over-production and diminished consumption owing to the reduced real purchasing power of wages, salaries, and fixed incomes?

Lieut.-Colonel Colville: My right hon. Friend has the situation constantly under observation, but he is unable to agree with the interpretation of price movements suggested in my hon. and gallant Friend's question. He does not think that increased production involving increased employment and so increased demand can be regarded as undesirable at the present time.

Major Stourton: Is my right hon. and gallant Friend aware that the principal cause of the rise in commodity prices is speculation due to cheap money?

Sir Nicholas Grattan-Doyle: asked the Chancellor of the Exchequer whether it is still the policy of the Government to

welcome a rise in the staple commodity price level; and, if so, will he state by how much, approximately, beyond the present average index number?

Lieut.-Colonel Colville: I would refer my hon. Friend to the Declaration by the Delegations of the British Commonwealth, July, 1933 (Command Paper 4403) where he will find the various considerations set out more fully than is possible in reply to a Parliamentary question. As there indicated it is not possible to state in precise terms an ultimate level of prices to be aimed at.

Sir N. Grattan-Doyle: If I repeat this question later, will my right hon. and gallant Friend give me a more definite answer?

Lieut.-Colonel Colville: I cannot make any promise. Perhaps my hon. Friend will read the declaration to which I have referred. It sets out at some length the view of the British Delegation, from which His Majesty's Government have not departed.

Oral Answers to Questions — FOOD SUPPLIES.

Mr. De la Bère: asked the Chancellor of the Exchequer whether he will state, in view of the operation of the Johnson Act which barred governments which had defaulted on inter-governmental loans from raising loans of any kind in the United States, what steps are the Government taking to ensure that the necessary financial resources will be available for the purchase of food supplies in case of emergency in the event of war?

Lieut.-Colonel Colville: My right hon. Friend appreciates the importance of this point, but it would not be possible for him to make any statement in regard to the method of dealing with financial problems which might arise in the event of war, since this would depend on all the circumstances then existing.

Mr. De la Bère: Can my right hon. and gallant Friend assure the House that the Government will consider taking steps to obtain credit for food supplies from the United States in the event of an emergency?

Lieut.-Colonel Colville: I can assure my hon. Friend that my right hon. Friend is paying regard to all relevant considerations.

Mr. De la Bère: Would not the best solution to this problem be an increase in home-grown foodstuffs?

Oral Answers to Questions — FIXED TRUSTS.

Sir John Mellor: asked the President of the Board of Trade whether he is now in a position to state when he intends to introduce legislation to give effect to the recommendations of the Departmental Committee on Fixed Trusts, with regard to certain companies registered under the Industrial and Provident Societies Acts?

Dr. Burgin: My right hon. Friend cannot at present add to the answer which he gave on 6th April to the hon. Member for Reigate (Mr. Touche).

Oral Answers to Questions — TRANSPORT.

ILLUMINATED ROAD KERBS.

Mr. Lyons: asked the Minister of Transport whether he can now give any report on the efficiency of the illuminated kerb as a factor in road safety; and in what areas it is being utilised?

The Parliamentary Secretary to the Ministry of Transport (Captain Austin Hudson): There are installations at Kingston-on-Thames, Nottingham, Tynemouth and North Shields. They are at present in the experimental stage.

Mr. Lyons: Can my hon. and gallant Friend say whether, so far as can be ascertained from the experiments, the illuminated kerb is giving satisfaction?

Captain Hudson: On the whole, we think that a system of adequate street lighting is preferable.

MOTOR CARS (REGULATIONS).

Mr. Lyons: asked the Minister of Transport whether he will define the standard of efficiency required for both brakes and steering-gear, respectively, under the new regulations he has promulgated?

Captain Hudson: The requirements as to braking equipment on the various classes of vehicle are set out in the regulations of which I am sending my hon. Friend a copy. All brakes and steering-gear are required to be maintained in good and efficient working order and kept properly adjusted.

Mr. Lyons: Are instructions given to police inspectors in various towns as to what constitutes efficiency before proceedings are instituted?

Captain Hudson: This matter has not been overlooked. Efficiency means that the brakes are sufficient under the most adverse conditions to bring a vehicle to rest within a reasonable distance.

Mr. Lyons: Are instructions given to the police authorities to arrive at a common form of agreement of what "reasonable" means?

HIGHWAY CODE (PEDESTRIANS).

Mr. Smedley Crooke: asked the Minister of Transport whether, in view of the fact that pedestrians disregard the section of the Highway Code dealing with pedestrians, he will, in order to save life and serious injury to pedestrians, take powers to make it compulsory to keep to the left when walking on footpaths and to the right facing oncoming traffic when walking on roads?

Captain Hudson: No, Sir. The law provides that a failure on the part of any person to observe any provision of the Highway Code, while not of itself rendering him liable to criminal proceedings, may be relied on as tending to establish or negative any liability. It is, therefore, for the courts to determine with regard to the circumstances of any individual case.

Oral Answers to Questions — MINCHI NHAMPTON AERODROME (WORKERS' WAGES).

Mr. Perkins: asked the Minister of Transport what was the net amount of money paid to each of the following men: Mr. Mills, Mr. Marsh, Mr. Morris, Mr. Shergold, and Mr. Smith for the week ended 17th March, while employed by his Department on certain work in connection with Minchinhampton aerodrome; and whether, in view of the exceptional circumstances, he will make some allowance for wet time?

Captain Hudson: The rates of wages and conditions are governed by an agreement between the employers and the trade unions. I am informed that during this particular week the men did five hours work for which they received, in accordance with the agreed rates, 5s.

Mr. Perkins: Is the hon. and gallant Member quite satisfied that 5s. was an adequate wage?

Mr. Perkins: asked the Minister of Labour for what reason Mr. Mills, Mr. Marsh, Mr. Morris, Mr. Shergold, and Mr. Smith were refused benefit for the week ended 17th March while employed by the Ministry of Transport on the construction of Minchinhampton aerodrome, in view of the fact that their net earnings for that week were between 4s. and 5s. each?

The Minister of Labour (Mr. Ernest Brown): Four of these five workers were not entitled to unemployment benefit in the week ending 17th March because they had to serve a waiting period, having been continuously employed for over To weeks. The other one, Mr. Morris, applied for unemployment assistance and received an allowance for the period.

Oral Answers to Questions — CIVIL ENGINEERING, STROUD (LABOURERS' WAGES).

Mr. Perkins: asked the Minister of Labour the general hourly rate for labourers employed in civil engineering in the Stroud rural district, and how this rate was fixed?

Mr. E. Brown: The rate of wages agreed upon by the Civil Engineering Construction Conciliation Board for navvies and labourers in the Stroud rural district is 1s. per hour. The classification of this area for wage purposes was determined by an agreement of the board on 8th July, 1936.

Period on Register.
Durham Administrative County.
Sunderland.
South Shields.


One year but less than two years
…
6,119
1,112
830


Two years but less than three years
…
3,630
872
612


Three years but less than four years
…
2,254
829
403


Four years but less than five years
…
2,275
822
201


Five years or more
…
4,951
1,999
344

A proportion of the persons who have been on the registers for extended periods will have had one or more short spells of employment, lasting not more than three days each, during such periods.

Oral Answers to Questions — WEEKLY REST IN INDUSTRY.

Mr. Mander: asked the Minister of Labour whether it is proposed to ratify the International Labour Convention on weekly rest in industry?

Mr. E. Brown: No, Sir.

Mr. Mander: Are the Government opposed to this Convention?

Mr. Brown: The issue also concerns wider matters.

Oral Answers to Questions — UNEMPLOYMENT (DURHAM COUNTY).

Mr. W. Joseph Stewart: asked the Minister of Labour the number of men and boys between the ages of 18 and 64 who have been unemployed in the administrative county of Durham and the boroughs of Sunderland and South Shields for the periods of one, two, three, four, and five years, respectively?

Mr. E. Brown: As the reply includes a number of figures I will, if I may, circulate it in the OFFICIAL REPORT.

Following is the reply:

Table showing the numbers 7f male claimants for benefit and applicants for unemployment allowances, aged 18–64, on the registers of Employment Exchanges in the Administrative County of Durham and in Sunderland and South Shields, respectively, at 15th March, 1937, who had been continuously on the registers for one year or more. Corresponding figures are not available for persons on the registers who were not applying for benefit or allowances.

Oral Answers to Questions — ABINGDON STREET SITE.

Mr. Mander: asked the hon. Member for Central Leeds, as representing the Ecclesiastical Commissioners, what type of building it is proposed to erect


on that portion of Abingdon Street where buildings are to be constructed in place of those now existing there; and whether he will give an assurance that the advice of the Royal Fine Art Commission will be taken in connection with the matter?

Mr. Denman: The Ecclesiastical Commissioners do not own the whole of the Abingdon Street site referred to. They are in consultation with other owners with a view to ensuring that the redevelopment of the site shall be a single scheme and that the new building shall be worthy of its surroundings. They already have the assurance that the advice of the Fine Art Commission will be sought.

Oral Answers to Questions — CRANE ACCIDENT, MANCHESTER.

Mr. Thorne: asked the Secretary of State for the Home Department whether he can give the House any information in connection with a crane accident at Messrs. William Ralphs, metal brokers, Grey Mary Lane, Manchester; and whether he is aware that the cable of the crane which broke was defective?

The Secretary of State for the Home Department (Sir John Simon): This accident, in which one man was injured, was due to the collapse of a hand crane. The crane's mast which was a wooden structure was embedded in a cast iron socket and it seems that the wood at the foot of the mast, below the socket, was rotten. This, and not any defect in a cable, was the cause of the accident.

Oral Answers to Questions — SPAIN.

Mr. Noel-Baker: asked the First Lord of the Admiralty whether any reports have now been received from British naval officers giving precise information concerning the mines laid by General Franco's warships in the waters adjacent to Bilbao?

The First Lord of the Admiralty (Sir Samuel Hoare): Perhaps the hon. Member will be good enough to await the Debate which is to take place later to-day on the Motion for the Adjournment.

Mr. Thurtle: asked the Secretary of State for Foreign Affairs whether, in view of the position obtaining on the northern

coast of Spain, arrangements have been made for the exchange of communications, with the minimum loss of time, between the naval officer in command of British Forces in these waters and the appropriate representative of the Foreign Office?

The Under-Secretary of State for Foreign Affairs (Viscount Cranborne): Communication is maintained between His Majesty's Naval Representatives and His Majesty's Ambassador to the fullest possible extent, having regard to the abnormal situation prevailing.

Lieut.-Commander Fletcher: asked the Secretary of State for Foreign Affairs whether the naval authorities off Bilbao have reported if mines laid by General Franco are laid in accordance with international law; and, if not so laid, has any protest been made?

Sir S. Hoare: I have been asked to reply. I have from time to time received reports from the naval authorities concerning minelaying by the Spanish insurgents off Bilbao. None of these reports suggests that this minelaying was not in accordance with international law. The last part of the question, therefore, does not arise.

Mr. Arthur Henderson: Is it not a fact that the object of this minelaying is to intercept commercial shipping, and has it not always been the view of His Majesty's Government that such minelaying is contrary to international law?

Sir S. Hoare: I think I had better deal with complicated questions of that kind in the Debate which is going to take place later.

Mr. Pritt: Can the right hon. Gentleman tell us under what international law pirates are allowed to lay mines?

Lieut.-Commander Fletcher: asked the Secretary of State for Foreign Affairs whether any British ships clearing for Spanish ports have applied for protection; and whether British ships at St. Jean de Luz have been informed that protection is available should they wish to clear for Bilbao?

Dr. Burgin: I have been asked to reply. Some inquiries have been received from shipowners on the subject,


and the position as to protection has in each case been explained. The owners of the British ships lying at St. Jean de Luz were informed on Saturday that the Government could not advise proceeding to Basque ports, including Santander and Gijon, but that in any case British naval vessels would, as already announced, give protection on the high seas if called upon.

Sir Percy Harris: Is the hon. Member aware that a British ship has arrived with a food cargo at Bilbao this morning?

Dr. Burgin: Yes, Sir.

Mr. Attlee: May I ask the hon. Member which explanation has been given—the one given by the First Lord of the Admiralty or the one given by the Secretary of State for Foreign Affairs?

Mr. Benn: asked the President of the Board of Trade what were the terms of the latest warning issued to British shipping as to approaching the Basque coast; whether any new advices are to be given; and what is the text of the same?

Dr. Burgin: On 8th April, the British shipping industry was warned that
owing to military operations in the neighbourhood of the Basque coast, particularly off Bilbao, it is especially dangerous at present for shipping.
It was added that
the existing instructions to British naval vessels to afford protection to British shipping on the high seas still, of course, remain in force.
On 12th April, the Board of Trade forwarded to the Shipowners' Associations copies of the answer on the subject which was given by the Prime Minister in reply to a question by the right hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair). The present advices state that the Government's present information does not enable them to advise entering into Bilbao, and that, as regards other ports such as Santander and Gijon, there is a degree of risk which may vary from day to day; but in any case British naval vessels will, if called upon, give protection on the high seas as already announced.

Mr. David Grenfell: Although the Minister said that the Government do not

advise British ships to enter these ports, are they putting a prohibition upon entry to the ports?

Dr. Burgin: That question had better be dealt with in the Debate, and not by way of question and answer. I know of no prohibition.

Mr. Thorne: When information is conveyed from the Department to the shipowners, is it the duty of the shipowners to convey it to those who are in charge of the ships?

Dr. Burgin: It is the special duty of the Board of Trade, as custodians of the interests of the Mercantile Marine, to bring to the notice of owners and masters any facts which may affect their navigation, and the way in which it is done is as a rule by telephone message.

Sir P. Harris: Does it not seem to be the case that the "Seven Seas Spray," which has safely got into Bilbao, is better informed than His Majesty's Government?

Mr. A. V. Alexander: Have the Board of Trade yet received notice from any shipowners of claims from the Bilbao Government in respect of the non-fulfilment of orders?

Dr. Burgin: Obviously that is not a matter which can be answered without notice.

Oral Answers to Questions — LEOPOLDINA RAILWAYS (BRITISH INVESTMENTS).

Sir Reginald Blair: asked the Secretary of State for Foreign Affairs whether, as representing British taxpayers who have invested in the Leopoldina Railway Company and the Leopoldina Railway Terminal Company, he will invite the Brazilian Government to include a settlement of the question of rates, fares, and working regulations respecting these two companies in the pending negotiations about British-held defaulted public obligations of the Brazilian Government?

Viscount Cranborne: I would refer my hon. Friend to the answer given to my hon. Friend the Member for North Newcastle-on-Tyne (Sir N. Grattan-Doyle) on 1st February. I would add that the affairs of these companies are an en-


tirely separate question from that of the Brazilian public debt, and I do not think that any purpose would be served by treating them together.

Oral Answers to Questions — KENYA (HEADMAN, APPOINTMENT).

Mr. Creech Jones: asked the Secretary of State for the Colonies when the appointment of Mr. Luka was made as headman for the Tigoni area and the exchange area Nyamweru of Kenya; by whom was he appointed; and whether the appointment carried with it any guarantee that Mr. Luka would agree to the removal of the Tigoni people from the Tigoni area to Nyamweru area?

Mr. Ormsby-Gore: Luka Wanganga, the leading Elder in Tigoni, was appointed on 21st August, 1936, Headman of Tigoni and the exchange area of Nyamweru, by the Provincial Commissioner of the Central Province of Kenya, acting on behalf of the Governor, in virtue of the authority delegated to him by the relevant Ordinances. I am aware that accusations were made that Luka had been bribed by Government to agree to the move, and that the absurdity of these accusations has been made known locally. No guarantee of any kind was sought or given.

Mr. Creech Jones: Was not an irregular method followed in appointing this headman, and is the right hon. Gentleman aware that this headman had no authority at all to agree to the alienation of the privately-owned lands of other natives?

Mr. Ormsby-Gore: I think I must have notice of the last part of the question. I am satisfied that this man was appointed headman in accordance with the terms of the Ordinance.

Oral Answers to Questions — MOTOR SPIRIT.

Mr. Crossley (for Major Procter): asked the Secretary for Mines the average c.i.f. cost per gallon of petrol landed at a United Kingdom port and the amount of preference granted per gallon to home-produced petrol?

Captain Crookshank: The average declared c.i.f. value of motor spirit imported

into the United Kingdom for the month of March, 1937, was 4.17d. per gallon. Motor spirit produced from indigenous materials at present receives a preference of 8d. per gallon.

Oral Answers to Questions — POTATOES (PRICES).

Mr. Hardie (for Mr. Leonard): asked the President of the Board of Trade whether his attention has been drawn to the fact that owing to the recent heavy rise in the wholesale price of potatoes the retail price in some districts has risen to 2d. per lb. for the best variety; and whether he proposes to take any action to assist the consumer?

Dr. Burgin: My right hon. Friend is aware that potato prices have risen during the past few weeks, and with the concurrence of the Agricultural Departments, he has authorised an increase in the quantity of maincrop potatoes that may be imported during April. I should, however, add that in recent months importers have not been able to fill the quotas allotted.

Mr. Hardie: Is that a reason for increasing the price?

Mr. Holdsworth: Would it not be as well to release the restriction on the acreage of potatoes which can be grown in this country?

Mr. Hardie: Cannot I have an answer to the question I put? Is that any reason for raising the price?

BUSINESS OF THE HOUSE.

Ordered,
That the Proceedings of the Committee of Ways and Means be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]

DISEASES OF FISH BILL [Lords].

Reported, with Amendments, from Standing Committee C.

Bill, as amended (in the Standing Committee), to be considered upon Monday next, and to be printed. [Bill 122.]

Minutes of Proceedings to be printed.

FINANCIAL STATEMENT (1937–38).

Copy ordered, "of Statement of Revenue and Expenditure as laid before the House by Mr. Chancellor of the Exchequer when opening the Budget."[Lieut.-Colonel Colville.]

Copy presented accordingly; to lie upon the Table, and to be printed.

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[Sir DENNIS HERBERT ill the Chair.]

Orders of the Day — FINANCIAL STATEMENT.

3.44 p.m.

The Chancellor of the Exchequer (Mr. Chamberlain): In my financial statement this afternoon I shall follow the usual practice of reviewing the figures of the past year before considering the problems of the future. The Committee are already fully aware from the Debates on the Defence Loans Bill and the Defence Estimates, that last year, this year and for several years to come, the national finances have been, and must continue to be, dominated and governed by one overshadowing consideration, namely, the vast expenditure upon Defence in which we are engaged. That statement is illustrated at once by an examination of the out-turn of the last Budget. When I struck my final balance a year ago, I expected that, at the close of the year, I should find myself in possession of a small surplus, in spite of the fact that I had made provision for an increase of more than £50,000,000 in the Defence Services; but very early in the financial year it became apparent that that provision would be insufficient, and in July, in speaking upon the Third Reading of the Finance Bill, I indicated that a deficit was practically certain.
The actual realised Budget deficit was £5,597,000. If we are to get a true picture of the relations between current revenue and expenditure we must bear in mind the amount that is included in the expenditure for redemption of debt. It will be recollected that I made no specific provision in the Budget last year for the payment of the contractual Sinking Funds, and authority was given me by the Finance Act to borrow for that purpose; but in the end that power was not required. The £224,000,000, the amount of the Fixed Debt Charge, was found to have provided a margin, over and above the cost of management and interest, of £13,127,000, sufficient to meet the contractual Sinking Funds of £10,196,000 and to provide for a margin of £2,931,000. The true surplus, therefore, of current revenue over current

ordinary expenditure, other than debt redemption, was £7,530,000. I might summarise the experiences of last year by saying that, broadly speaking, revenue fulfilled my anticipation, and that if it had not been for the excess of Defence expenditure over the provision I had made, which amounted to nearly £8,000,000, I should have ended the year with a formal surplus of nearly £2,250,000, after providing over £13,000,000 for the redemption of debt.

REVENUE, 1936–37.

If I may take this revenue for 1936–37: the total realised ordinary revenue was £797,289,000, which was a little less than the estimate of £798,381,000, but showed an increase over the previous year of £44,369,000. I had estimated the Inland Revenue at £28,000,000 more than in the preceding year, but it fell short of my estimate by £3,250,000; on the other hand, the Customs and Excise, which I had estimated at £317,500,000, or £14,000,000 more than the previous year, exceeded my estimate by the same amount. Therefore, Inland Revenue and Customs and Excise taken together realised the expectations of the Budget.

The total of Inland Revenue was £429,637,000, which, as I have said, was £3,250,000 less than I had hoped for. The Income Tax, at £257,250,000, fell short of my estimate by £1,750,000, a fact to which I would invite the particular attention of hon. and right hon. Friends of mine who thought last year that I might easily have avoided any further taxation if only I had chosen to be a little more optimistic. The Surtax also is disappointing; it was £3,000,000 less than I had estimated. Death Duties gave me £88,000,000, or £1,000,000 below the estimate; so that, in the case of these three items, Income Tax, Surtax and Death Duties together, my total revenue was short of what I had expected by £5,750,000.

On the other hand, I had the good fortune to be able to set against that disappointment a gain of more than £2,000,000 on Stamp Duties, which amounted to no less than £29,140,000. Taking into consideration the reduction in the Companies' Capital Duty in 1933, that is a record figure, and it is particularly gratifying because the Stamp Duties, being associated with Stock Exchange activities, form a sort of


barometer of the activity of the trading world in general. Customs and Excise gave me a total of £320,782,000, or £3,250,000 more than the estimate, and nearly £17,500,000 over the receipts in the previous year. But of that, £3,500,000 must be ascribed to the increase of the Tea Duty which was part of the Budget proposals. The surplus over the estimate was partly due to the new duties on beef and veal, which were imposed in December, and by the end of March had collected a revenue of about £500,000; and it was also increased by forestalment of certain commodities, especially tea, presumably in intelligent anticipation of additional duties to be imposed this afternoon.

On the whole, I consider these results extremely satisfactory. They are the product both of expanding trade and of the increase in the purchasing power of the nation. The latter is demonstrated by the rise of £1,250,000 in the duty on spirits, £1,800,000 under beer, and £2,400,000 under tobacco; and the former by the increase of £2,600,000 from the Oil Duties; while the duties under the Import Duties Act and the Ottawa Agreements Act produced some £35,000,000, or more than £2,500,000 over the receipts of the previous year.

The next item on the Revenue side concerns the Post Office. That great business, under the energetic administration of my right hon. Friend the Postmaster-General, continues to expand at a remarkable rate, and the gross revenue last year was £2,250,000 more than had been estimated. But, since the establishment of the Post Office Fund and the arrangements for providing for a fixed contribution from the Post Office to the Exchequer, the Treasury does not benefit by that expansion, which moreover was offset by additional expenditure. All the same, this increased business in the Post Office is another significant indication of the general business activity of the country. The net receipt from the Post Office, which is, as the Committee know, based upon the fixed contribution subject to certain adjustments, came to £10,970,000, which is slightly under the estimate of £11,256,000. The remaining items of revenue, totalling together £35,900,000, were within £750,000 of the estimate, and they do not call for any detailed comment.

EXPENDITURE, 1936–37.

I come now to Expenditure. I have already stated that the Fixed Debt Charge of £224,000,000 provided a not inconsiderable sum for the reduction of debt, but the remaining figures strikingly demonstrate the effect which the defence programme is having upon our national expenditure. Thus, the Civil Votes showed a saving on the original estimates, including the advance estimates for Supplementaries, of £3,188,000, but that was more than wiped out by the £7,821,000 which was the excess of the Defence Votes over the provision for the Defence Services. The total Defence issues were £186,072,000, or nearly £50,000,000 more than was spent in the year 1935–36, and that figure will perhaps give the Committee an idea of the amount which, if the circumstances of the world had been happier, would have been available for the redemption of debt and for other purposes.

NATIONAL DEBT.

The Committee will desire that I should say a few words about the National Debt before I conclude my review of the past year. The low rate of interest on Treasury bills prevailed during the whole of the period. The average rate was 11s. 8d., which was only 2d. more than the low record of the previous year. In November last I was able to raise £100,000,000 of 2¾ per cent. Funding Loan, with a period of 15 to 20 years, at 98½, and that enabled me to meet a maturity of Treasury Bonds in February of this year, and to effect a further diminution of the Floating Debt, which during the year has been reduced by £84,000,000. There is but little change in the nominal total of the debt. £13,000,000 has been applied out of revenue for Sinking Fund, but that was off-set to the extent of £5,500,000 by the Budget deficit and to the extent of another £3,500,000 by borrowing under the Tithe and Shipping Acts, for which we hold security. The net cash issue from the Exchequer, therefore, for debt redemption, was £4,000,000. But the issue of Funding Loan at a discount and the application of Sinking Fund at a premium caused an increase in the nominal total of over £5,000,000, and on balance the nominal total of the debt was increased by £1,296,000.

I need not remind the Committee that the nominal total of the debt does not


really give a correct indication of the situation. The true criterion is to be found in the cost of interest and management, and if we are to get a proper picture of the change in that respect which has taken place since 1931, for instance, we must make allowance on the one side for the American Debt and on the other side for the difference between the interest accrued and the interest actually paid on National Saving Certificates. When these adjustments have been made it will be found that there is a relief of £60,000,000 a year, of which the permanent saving due to the War Loan conversion and later operations of a similar character, amounts to about £40,000,000, while the rest is due to the low rate of interest on Treasury bills.

The only other observation I have to make on this head concerns the Exchange Equalisation Account. I believe that the Committee are now resigned to the fact that the Exchange Equalisation Account must continue to be wrapped in mystery, but all the same they may like to have from me once more an assurance that the account still shows a profit.

EXPENDITURE, 1937–38.

I am sure the Committee are now quite ready to face the new year with all its implications. But before I come to the moment when I shall pronounce those familiar words "Open, please," a certain amount of preparation is necessary by way of examination of the expenditure that will be required and of the amount of revenue which will be available on the existing basis of taxation. I begin with the Fixed Debt Charge. That has stood for four years now at £224,000,000. During that time it has provided £45,500,000 for the redemption of debt. When I come to consider where I should fix it this year, once more I come up against the Defence programme. The Defence Estimates have shown that I am proposing to borrow for that purpose a sum estimated at present at £80,000,000 for this year. In view of that fact it would be absurd at the same moment to attempt to start a Sinking Fund for the redemption of debt. I propose, therefore, to keep to the old figure of £224,000,000. Although even now it is still possible that at the end of the year there may emerge some margin for debt redemption, I think it will be only prudent to repeat the precautionary

measure of the last few years and to ask for power to borrow for the payment of the contractual Sinking Funds.

Similar considerations to those which have precluded me from increasing the amount of the Fixed Debt Charge, also govern my treatment of another matter to which I must direct attention. Under the existing law if there is a deficit in one year the Chancellor of the Exchequer is required to set aside an equivalent amount in the following year for the redemption of debt, unless he is specially exempted by law from that obligation. In strictness, therefore, I ought to add to my expenditure for the new year the amount of the deficit on the old one, but in the present circumstances I propose to follow the precedents of the Parliamentary years 1931 and 1933, and to ask again that I may be relieved by the Finance Bill from this obligation for 1937–38.

On other Consolidated Fund services I shall want £8,000,000 for Northern Ireland, £3,200,000 for "Miscellaneous," and £300,000 for the Post Office Fund, making a total of £11,500,000, which is slightly under the expenditure last year. When I come to the Civil Estimates one change of presentation is necessary. That arises out of the decision last year to abolish the system of earmarking Motor Vehicle Duties to the Road Fund and to bring the Road expenditure out of the self-balancing items into the annual Estimates. That means, therefore, that this year in the presentation of our accounts both these items, revenue and expenditure, in connection with roads, are withdrawn from the category headed "Self-balancing revenue and expenditure" and they will appear under the ordinary revenue and ordinary expenditure. On the other hand, since the proceeds of the wireless licences are retained in the Post Office revenue I propose to keep the grant to the British Broadcasting Corporation in the self-balancing items, although it is now shown as a separate item in Class 4 of the Civil Estimates and not as part of the Post Office Estimates.

The estimated expenditure on roads last year was £24,795,000, and for the current year the corresponding figure is £28,500,000. The amount to be voted, after taking into account the balance in the Road Fund of £5,000,000 and the estimated amount to be received from fees


and fines, which is nearly £1,000,000, is £22,500,000, spread over a number of Votes details of which were given in the Vote on Account. This £22,500,000, therefore, is a new addition to Supply expenditure and is covered by the estimated product of Motor Vehicle Duties in the revenue.

The estimates for the Supply Services, leaving out the self-balancing item of the Post Office, are already known to be £620,218,000. That, however, includes the grant for the B.B.C., which I prefer to retain in the self-balancing items and which amounted to £2,870,000. Deducting that, the net amount is £617,348,000, made up of £198,268,000 for Defence, and £419,080,000 for Civil Votes. I am proposing, however, to add another £10,000,000 to that figure as a margin for Civil Supplementary Estimates. The total of Exchequer issues for the Supply Services last year, including for comparison £27,427,000 Motor Vehicle Duties which were apportioned to the Road Fund and included in the self-balancing items, was £594,657,000, and, therefore, the real increase this year in the Supply Services is £32,691,000, made up of Civil Votes £20,495,000, and Defence Votes £12,196,000. Of course, hon. Members will have in mind that that figure for Defence excludes the £80,000,000 which is estimated to be borrowed under the Defence Loans Act.

I am now in a position to summarise the expenditure for 1937–38, including the £10,000,000 for Supplementary Estimates, the Civil Votes, and omitting the self-balancing items: Fixed Debt charge, £224,000,000; other Consolidated Fund charges, £11,500,000; Supply Services, £627,348,000; total, £862,848,000.

REVENUE 1937–38 ON EXISTING BASIS.

Now I turn to consideration of the revenue that I may expect to get on the existing basis. I begin with Customs and Excise. I anticipate that the economic conditions which gave me such a favourable result last year will continue during this year and will be further reinforced by the festivities connected with the Coronation. Moreover, I must take into account the fact that the Beef and Veal Duties, which were in force only four months last year, will now be running for a full year and should give me £2,500,000 more than they did last year.

In those circumstances I think I am justified in expecting another substantial expansion of revenue from Customs and Excise. I am budgeting for an increase of over £12,000,000 on the receipts of last year. I am assuming an increase on nearly all the main heads. The most important are: from spirits, over £800,000; from beer, tobacco and oil, nearly £2,500,000 each; from the 1932 Tariff Duties, rather more than £2,000,000. Tea will be an exception. I must allow rather less for tea because of the forestalments which I have already mentioned, which had the effect of increasing last year's revenue at the expense of this year's. The full details will be found in the White Paper which will be available when I sit down.

The total for Customs and Excise on the existing basis is £333,000,000. Under Inland Revenue I expect also an appreciable increase in Income Tax and Surtax. Last year Income Tax gave me £257,250,000 but, with the growth of profits for 1936, which forms the basis for the assessment of Income Tax in 1937, there should be a considerable advance in the revenue of this year, and I am estimating it at £275,000,000. Surtax in 1936 gave £53,500,000, which was less than I expected. There, again, there should be a recovery this year, and I put the figure at £58,000,000. From Death Duties I estimate that I shall receive £89,000,000, and I put Stamp Duties at the same figure that I got last year, namely, £29,000,000. Adding, therefore, £1,500,000 for the remaining sources of revenue, I get a total for all Inland Revenue Duties of £452,500,000. Coming to other revenue, I estimate that I shall receive from Motor Vehicle Duties £34,000,000, which compares with receipts last year of £32,727,000, the Exchequer share being £5,300,000 and the Road Fund the rest.

I put Crown lands at the same figure as last year, £1,350,000 His Majesty, in the Gracious Message that was read on 16th March, followed the example of His predecessor in placing these revenues at the disposal of the House of Commons and it is, therefore, proper to take account of them now, although there has not yet been time to complete the arrangements by the grant of a Civil List. Sundry Loans, at £4,300,000, will be slightly less than last year, and Miscellaneous


Revenue, at £11,000,000, is less than that of last year by £13,600,000. Hon. Members are aware that in recent years Miscellaneous Revenue has been swollen by non-recurrent receipts, and it is always an item which is subject to considerable fluctuation. This year the fluctuations all seem to have gone the same way, but the largest single item is the disappearance of that £5,250,000 which was so generously contributed by the Road Fund to the general revenue last year. I thought last year that I might have been in a position now to propose a revision of the present contribution from the Post Office, which has been fixed for four years at £10,750,000, but after consultation with my right hon. Friend the Postmaster-General we both agreed that the proper thing to do is to maintain the same figure for another three years. Post Office Net Receipt, which is based on that contribution but is subject to adjustments mainly arising out of services between Departments, is taken at £11,800,000. I can now summarise the revenue from all sources, excluding the self-balancing items, as follows:—

Customs and Excise, £333,000,000.
Inland Revenue, £452,500,000.
Other items, £62,450,000.
Total, £847,950,000.

The expenditure I have already given—£862,848,000. I am, therefore, left with a prospective deficit to cover of £14,898,000.

I daresay the Committee will be anxious to hear what methods I have in mind for dealing with this deficit but, before I come to that there are certain minor matters which, although they will not materially alter the situation that I have depicted, nevertheless must be mentioned in my statement. I hope, therefore, that the Committee will give me their indulgence for a few moments while I run through them. I think I should warn the Committee not to draw any premature conclusions from the amount of the deficit that I mentioned.

MEASURES AGAINST TAXATION AVOIDANCE.

It will be within the recollection of hon. Members that a considerable proportion of last year's Finance Bill was occupied by measures devised to protect the

Revenue against the avoidance of taxation. I have two further proposals to make this year for the same purpose. The first one concerns the operation which is, no doubt, well known to most hon. Members under the term "bondwashing." This particular kind of washing is a term used to describe operations under which the owner of securities sells them at a price that covers accrued dividend and buys them back again, after the dividend has been paid, at a lower price. The result of these transactions, which are technically of a capital character, is to deprive the Exchequer of a tax which otherwise it would have received if the owner had retained the securities and drawn the dividends upon them. I am sure the Committee will agree with me that it is not right that people should be allowed to evade the incidence of the Income Tax, and I am glad to be able to say that my proposals have the support of the representative bodies in the financial world, to whom I wish now to express my thanks for their assistance in co-operating with me in framing these provisions. It is extremely difficult to estimate the gain that I shall receive from the abolition of "bondwashing" but I put it at not less than £150,000 in the current year, and at £1,000,000 in the year after and succeeding years.

My second proposal is intended to strengthen certain provisions with regard to tax avoidance in the last Finance Act. It may be recollected that on the Report stage of the Bill, when I made a concession about a provision which was retrospective in character, I gave what I described at the time as a fair warning that similar latitude should not be expected in the future and that, if people persisted in devising these ingenious contrivances for defeating the intentions of the Legislature, they must not expect that they would escape retrospective legislation. In some quarters that warning was disregarded, and no sooner was the Finance Act upon the Statute Book than some highly artificial arrangements for circumventing its provisions were adopted in connection with particular kinds of one-man companies known as investment companies. I propose to take power to defeat that evasion. In order to enforce my warning of last year, I propose to make the remedies effective for purposes of Surtax for the year


1935–36. As this is a proposal for protecting the existing basis of taxation, the fruits of this are included in my estimate for Surtax.

There are one or two other proposals affecting Inland Revenue which will have to be dealt with in the Finance Bill. One of them, requiring a Resolution, is intended to prevent excessive allowances being given in respect of mills and factories in computing trading profits for assessment to Income Tax. Another will continue for five years the increased allowance for repairs from Schedule A assessments in arriving at the net assessment on which the owner pays the tax. In this case, as it is a relieving provision, no Resolution will be required.

HOP DUTY.

The £4 a cwt. duty upon imported hops has been in existence since the wartime hop control ended in 1925. It expires in August next. It has had a very valuable effect. It stabilised the home market, and I do not think it has done any harm to any of the interests concerned, and, in consultation with my right hon. Friend the Minister of Agriculture, I propose to renew it for another four years, subject in all respects to the same conditions as before.

CANADIAN TRADE AGREEMENT.

Then I shall have to ask for legislative authority for certain points which arise out of the recent Trade Agreement with Canada, and I shall have to introduce resolutions applying the Ottawa Agreements Act to the new Agreement, reducing the preferential duties on certain silk stockings of Empire production and abolishing the preferential duties on certain musical instruments known, I believe, as reed organs, also of Empire origin.

I believe the Committee has heard of the Medicine Stamp Duties and knows that the report of a Select Committee on that subject has been made public. I have had a good many representations from various quarters since its publication, and I am having the recommendations of the Committee examined in the light of those representations. But, in view of the very complex issues involved and the existing strain upon the time of Parliament, I am not proposing to introduce legislation on this subject in the Finance Bill this year.

There is another minor proposal which is designed to secure that motor vehicles on which a container or other similar device is superimposed, shall be taken as though the weight of the vehicle for taxation purposes, in appropriate circumstances, included the weight of the container.

Finally, I would recall a statement by my right hon. Friend the Minister of Health on 24th February last, when he informed the House that the Government had decided to meet views which have often been expressed here and to abolish the Male Servants Licence Duty. A Clause in the Finance Bill will give effect to that proposal as from 1st January next.

MAJOR TAXATION PROPOSALS.

Now I have disposed of all the minor items in the Finance Bill with which I need trouble the Committee, and I can return to my deficit. I must say that last year when I had to impose fresh taxation to the tune of £15,000,000, almost exactly the same sum as is found in the deficit with which I am confronted to-day, I did expect and hope that I should be spared the unwelcomed task of having to impose new burdens on the taxpayer in 1937. The fact that I have to make fresh calls now, in spite of the relief which is afforded to the Budget by the Defence Loans Act, is really the measure of the amount by which we have been able to accelerate our Defence programme. I cannot help thinking that the taxpayer, although he may groan and grumble at the fresh demands which are being made upon him, will find some consolation in the thought that his additional contributions represent an ever quickening approach to the goal of safety.

However distressing the need for new taxation may be, I cannot think it has come altogether as a surprise to the country. I am confirmed in that view by the unusually large number of suggestions which have been offered to me by correspondents with a view to assisting me to find new and hitherto untapped sources of revenue. I have had some of these suggestions collated and arranged in alphabetical order, for convenience, and I think the Committee might like to hear some of them in order that they may judge of the embarrassing opulence of the choice put before me. It has


been suggested to me that I should tax or put increased taxes upon:

Advertisements, Antiques and Automatic slot machines.
Bachelors, Bookmakers, Bicycles and Beer.
Cats, Cosmetics and Co-ops.
Dogs and Débutantes.
Fiction and Friendly Societies.
Loud speakers and Lotteries.
Newspapers and Newsvendors.
Speculators and Spelter.
Tips—also described as "gratuitous livelihoods"—and Tricycles.
Wages and Whisky.

I am sure the Committee must admire the variety and ingenuity of these suggestions, but a very careful examination of the letters in which they have been embodied has revealed that there is one feature common to them all. They are all directed to practices and indulgences which are not shared in by their authors. To adopt a well-known couplet, they seek to
Compound for things they are inclined to
By damning those they have no mind to.
But the Chancellor of the Exchequer cannot employ a criterion of that kind. He has to consider, first, the amount of revenue which any particular tax is capable of producing. He has to set against that the cost of its collection, and although he can never leave out of his account the social, moral or economic effects of any proposal which he may make, he cannot allow personal taste and personal prejudices to govern his procedure. Therefore, while I am most grateful to all my correspondents for putting their ideas before me, after carefully considering them and applying to them the tests which experience has shown to be necessary, I am reluctantly obliged to say that none of them is of any use to me, and I shall have to look elsewhere for my missing revenue.

INCOME TAX.

There is one source of revenue to which all Chancellors look in time of trouble and which has never yet failed them. I refer to the Income Tax. I have observed that at least two ex-Chancellors of the Exchequer have publicly expressed the view that an increase in Income Tax is justified and is to be expected. They

have gone further and they have agreed, I am sure without any collusion, that the proper extent to which Income Tax should be increased is to be found by rounding up the present uneven figure of 4s. 9d. in the £ to the more convenient figure of 5s. I cannot resist such overwhelming authority, and I propose to adopt the proposition of my right hon. Friends the Members for Epping (Mr. Churchill) and Hillhead (Sir R. Home). The 3d. increase in Income Tax will give me £15,000,000 in a full year and £13,000,000 in the current year. The gap which I now have to fill has been reduced to the trifling figure of £1,748,000.

Before I come to deal with it, I want to put certain considerations to the Committee which may give it a somewhat different aspect. Under the Defence Loans Act the Government were authorised to borrow up to a maximum of £400,000,000 spread over a period not exceeding five years. That is to say, assuming that the period remains unchanged and that the borrowing powers are exercised to the fullest extent, an average of £80,000,000 a year. But in the Statement relating to Defence Expenditure, which was issued last February it was clearly laid down that although it was not yet possible to determine which year would see the peak, the level of defence expenditure was likely, over the next two or three years, to be very much heavier than in the present year. That being so it would be natural to expect that the curve of borrowing, even allowing for expansion of revenue, should to some extent follow the curve of expenditure, beginning well below the average and rising to a peak and falling thereafter. Therefore, it was a matter of very considerable surprise to me that the revelation, when the Defence Estimates for this year were published, that I pro-posed appropriations-in-aid which required borrowing in the first year up to the full amount of the average excited no comment of any kind, and the acutest minds in this House and out of it thereby missed the clue to the proposal which I am about to put before the Committee—a proposal which in fact determined the amount which it is necessary for me to borrow during the current year.

On this occasion I have thought it necessary to take a somewhat longer view than is generally required in examining, the contents of a normal Budget. Hon.


Members no doubt have in mind all the qualifications and the reserves which we have felt obliged to make in attempting to describe or to define a Defence programme which must continually be subject to variations in scope and in time, in one direction or in another, according as conditions change, but, broadly speaking, we know that we have got to prepare ourselves for expenditure of a very special and exceptional character, which will rapidly increase and then later fall until it reaches its new level. Under those circumstances it seemed to me that if the Chancellor of the Exchequer in each year had to impose a succession of new taxes, hitting first in one direction and then in another, that would be a course of proceeding which would be likely to cause the maximum amount of uncertainty and disturbance, and I sought, therefore, for the means of providing at least a major part of the expenditure that would be required by some device capable of growth in itself, but easily adjustable, so as to allow for variations in the yield of revenue from existing taxation.

Where could I find such a source of revenue, bearing in mind all the differing circumstances of the variously occupied men and women who make up the population of this country? I have already increased the Income Tax, and this year the increase is not accompanied by those changes in the allowances which last year and the year before did so much to help the possessors of small incomes subject to the tax. I might, of course, increase indirect taxation, but the prices in the shops, which particularly affect wage-earners, the lower grades of clerical workers, and the smaller rentiers whose incomes are largely derived from fixed interest-bearing securities—those prices already show a tendency to rise, and I did not want to do anything to push them any higher. But, Sir, nobody who reads the papers carefully, and especially who pays attention to the reports of trading concerns, can fail to be struck by the almost monotonous story repeated in their annual reports of increased business, record turnovers, and larger profits. I suspect that on the whole those profits still fall far short of the level of 1928 or 1929, but, on the other hand, there is no indication that they have yet reached their peak, and I myself anticipate that they will continue for some time to come

to expand, I give every credit to the leaders of industry for the ability and energy with which they are conducting their business, and to the trade unions and the workers generally for the way in which they have co-operated in expanding production, but I think everybody will admit that the Government have played a large part in the revival by creating the conditions under which this great activity has become possible, and in so far as it is consequent upon orders placed by the Government it arises directly from the expenditure of the State.

NATIONAL DEFENCE CONTRIBUTION.

In those circumstances it does not seem to me to be unreasonable to ask that this growth in business profits should be made the occasion of some special and temporary contribution on the part of those concerns which have benefited, towards the cost of National Defence. Accordingly, I am going to propose the imposition of a tax upon such growth, which, in order to emphasise its purpose, I call the National Defence Contribution. I propose that the National Defence Contribution shall be payable in respect of the growth of profit by all persons engaged in industries, trade, or business of any kind whose profits, in any accounting year ended after 5th April, 1937, exceed £2,000. That, of course, lets out small concerns whose profits are at a low level. The charge will be in respect of the growth of profit only, and therefore if there is no growth of profit, there will be no charge. It will not be applicable to professions and employments, for although those who are engaged in employments or in professions will no doubt benefit by the general improvement, I do not consider that circumstances would warrant their inclusion in this charge; and indeed the particular proposal which I have to make could not be appropriately applied to them.

In order to measure the growth of profit, some standard must be taken. I am proposing that there should be two alternative standards, the choice being the choice of the taxpayer. Either it will be the actual profits of certain specified years, which I call the profits standard, or it will be a percentage on the capital employed in the business, which I call the capital standard. Where the profits standard is adopted, it will be the average


profits of the years 1933, 1934 and 1935, and the charge therefore will be on the amount of the increase of profits shown in the accounting period over the average of those three years. Where the capital standard is adopted, the capital will be calculated at the cost of the assets in the business, subject to suitable adjustments, and upon that capital I propose that, in the case of a company, 6 per cent., and in the case of individuals or firms, 8 per cent. shall be taken as the base which forms the capital standard. Therefore, where the taxpayer chooses the capital standard, the charge will be on the amount by which the profit in the accounting year exceeds 6 or 8 per cent., as the case may be, upon the capital employed.

Now I come to the rate of contribution, and I think that sound principle requires that a special and temporary tax of this character should be related, not only to the growth of profits, but also to the absolute prosperity of the firm. You may have a considerable growth of profit without there being, accompanying it, a prosperity on the part of the firm, or you may have a firm which is very prosperous but whose profits have only increased by a small amount. I have in mind, therefore, that the rate of charge is to be increased as the prosperity advances. In order to carry out this plan, it will be necessary in each case to ascertain what is the capital of the concern, whether the profits standard or the capital standard be adopted, because the only way of measuring the absolute prosperity will be by determining the rate of yield on the capital that is represented by the actual profits. The first step, therefore, will be to calculate out the profits, expressed as percentage upon capital, and that percentage will determine the charge upon the growth.

I have said that the rate will advance with prosperity, and for the purpose of graduating the charge I am proposing to divide the return on capital into four regions—up to 6 per cent., between 6 and 10 per cent., between 10 and 15 per cent., and over 15 per cent.—and the rate of the charge applicable to the increase of profits will depend upon the region or regions occupied by the increase. For instance, if the capital standard is adopted, the increase, if small, will lie wholly in the region between 6 and 10 per cent. As the profit grows, it may

cover successively higher regions until it reaches the top, and the part which lies in each region will be charged at the rate which is appropriate to that region. Where the profits standard is adopted, the principle will be the same, but the increase will start from a higher level, because the taxpayer will always choose the profits standard in preference to the capital standard if the profits standard is higher than 6 per cent. of the capital. The actual rates of charge will be: Up to 6 per cent., nothing; between 6 and 10 per cent., one-fifth of the growth; between 10 and 15 per cent., one-quarter of the growth; and over 15 per cent., one-third of the growth.

Mr. Pethick-Lawrence: Which part?

Mr. Chamberlain: That part which is over 15 per cent. is charged according to the region it applies to. Now I candidly say that I can hardly expect hon. Members to grasp at the first hearing and in full all the implications of the system which I have been endeavouring to describe. I spent considerable time in trying to frame words which would exhibit at once a simple and an accurate description of this system of graduation, and I am afraid I may have had very little success. [HON. MEMBERS: "No."] In practice I do not think that this plan will be found at all difficult, but in order to elucidate it further I have had a number of illustrations worked out, and they will be found in the White Paper. I should add that where in one accounting period the profit falls below the standard, that deficiency will be available for set-off against the profit in excess of the standard in other periods. But there is one particular class of case which I think deserves special mention, because it differs materially from the normal. I refer to the struggling concern which has had a series of losses in the past and which is only just beginning to make a profit. Of course, in that case the standard of growth of profit will be reckoned not by reference to the losses which have been made before, but by reference to the capital employed in the business.
But I want to go a little bit further in meeting a case of that kind, and I am proposing, therefore, that the losses which have been incurred during the last four years, in so far as they have not yet been written off, shall be carried forward


and set off against the profits chargeable against that year. I have already said that the contribution will only be payable if profits exceed £2,000 in all, but if the full charge were made directly the profits exceeded that figure the transition would be too abrupt and accordingly I have included a device for tapering off this exemption, under which a deduction will be allowed from profits of a fifth of the amount by which the profits fall short of £12,000. The effect of that is this: where the profits are £2,000 they are exempt, where they are £3,000 a deduction of £1,800 will be made from the profit. When they reach £4,000 the deduction will £1,600, and so it goes on, the deduction diminishing until at £12,000 profit it disappears altogether.
The Committee will desire to know when this new proposal is intended to operate. It would, of course, be possible to fix a single date and say that the accounting period should begin then; but, of course, different concerns have different accounting periods ending at different times of the year, and I think it will be much more convenient to allow the first assessment to be made for that accounting period in each case which first ends after 5th April of this year. That means, of course, that the accounting periods fall on different dates according to the practice of the firms. For example, if a firm is in the habit of making up its accounts to, say, the end of June, the first accounting period will end on the 30th June next. If, on the other hand, it has been in the habit of making up its accounts to the 31st March, which comes before the 5th of April, the first accounting period will end on the 31st March, 1938.
Of course, the corollary to that is this, that when the National Defence contribution comes to an end, provision will have to be made, so that every concern has been subject to the contribution for exactly the same period of time. When it is remembered that most firms make up their accounts to the end of December, that no assessment can be made until after those accounts are completed, and that the tax in all cases will only be payable two months after the assessment has been made, it will be seen that I can expect but very little revenue from the National Defence contribution this year. I should not like to put it higher than

£2,000,000. But next year there should be a yield of the important order of £20,000,000 to £25,000,000. Thereafter, the yield will depend on the general prosperity of the country' as shown by the excess of profits over the basic return on capital. Thus, Sir, the National Defence contribution will fulfil my requirement of a new sort of revenue, which will be sufficient this year to bridge the very narrow gap and will grow next year to such an extent as, with the expansion of revenue from existing taxes, will serve to meet the country's needs. Beyond that I will not at the moment look.

Mr. Lambert: For what period is this tax to continue?

Mr. Chamberlain: It is not for me to say now, but I should say for so long as it is required. I impress upon the Committee that I regard it as a temporary tax, and as the process of rearmament cannot proceed for any indefinite time, it is perfectly clear that the purpose for which the tax is being imposed will come to an end at some time, and I should imagine that the tax would then come to an end. I should like to add that I believe that I have in this new impost created a flexible instrument, which should be easily adjustable to changing conditions with the least amount of disturbance of confidence and stability. The Resolution which covers it will necessarily be drawn in wide terms, but the provisions for the exemption of small concerns and the other adjustments will appear in the Clauses of the Finance Bill.

ESTIMATED SURPLUS.

I am now in a position to strike my final balance. I put the revenue on this basis at £847,950 000. The addition to the standard rate of Income Tax, the new National Defence contribution and the gain from bondwashing I estimate to bring in £15,150,000. My total estimated revenue is thus £863,100,000. The total estimated expenditure is £862,848,000 leaving me with a prospective surplus of £252,000.

I have now completed the sixth financial statement that I have been privileged to make to this Committee. I am well aware that that period of office has been exceeded by several of my predecessors. I believe that the record is held by Mr. Pitt who was Chancellor of the Exchequer


for 19 years, over 17 of which were consecutive. But, Sir, since his day, the mortality rate among Ministers has risen considerably and I have to recognise that I have already held this office for an unusually long period. It would be presumptuous in me to expect that I could retain it for many more years. It is, therefore, an appropriate moment to make a very brief examination of the future prospects.

The recurrent theme of my statement to-day has been the pressure of rearmament. Perhaps it is not altogether surprising that some Jeremiahs have expressed doubts as to our ability to carry this vast burden without wilting under the strain. But my first reflection upon that subject is that at least the strain has fallen upon us at a time when our credit is exceptionally high and our revenue is expanding. How much more serious would our condition have been if this great imposition had fallen upon us at a time when our Budget position was at its worst, or if we had weakened our credit and depleted our resources by issuing great loans, or by incurring heavy deficits, in an effort to make our Budget policy serve as an instrument for stimulating economic activity during the time of depression. As it is, we start with a favourable wind, and if there are storms ahead at least there is no visible sign of them as yet.

REVENUE EXPANSION.

But the most important factor in forming a judgment as to whether we can carry this enormous increase in our expenditure without a weakening of our finances or of our credit, lies in the possibility of an expansion of the revenue, and if we are to estimate those possibilities, we must bear in mind one very important circumstance, and that is, that owing to the fact that Income Tax is related to the conditions in the year preceding the year of assessment, and that Surtax is concerned mainly with conditions two years before the year of collection, there must always be a lag in the revenue recovery behind the business recovery. Suppose you take the taxes and the rate of taxes in 1929 as a basis. In that year those taxes produced £677,000,000. They began to fall the year after and continued their downward path until the year 1933, when they touched the bottom figure of £575,000,000. But the tide had already

turned by that time. The worst of the depression was over some time before 1933, and even in 1936 the yield of these same taxes, at the same rates, probably fell short by something approaching £100,000,000 of what they would have reached by the natural growth of yield arising out of the increase of the adult population by that time. I consider that it is a fair conclusion to be derived from these considerations that we have still before us a considerable period when we may count on an expansion of revenue. When I take into account that the new sources of revenue which have been tapped since 1929 brought us in last year an addition of something like £130,000,000, and I add to that the new springs that have been opened up to-day, I cannot feel any apprehension of the possible failure of revenue.

Only two contingencies might disappoint the expectations thus aroused. One would be some great world disturbance outside our control which, sooner or later, might involve us in its vortex. The whole aim of His Majesty's Government is to use all their power and all their influence to avoid such a disaster. The other danger that might arise would be from a too reckless expenditure upon objects that were not vitally necessary. That can be avoided by wise and prudent administration. My hope is that the general prosperity, upon which, after all, the fate of every Budget depends, will pursue an orderly and regulated progress, so much to be preferred to violent advances which are often followed by violent collapses. It may well be that the proposals which I have made to-day will exercise a steadying influence in that direction. I have endeavoured to avoid, on the one hand, the tremendous increase in taxation which would have been required if we had attempted to defray without borrowing the full cost of rearmament, because I was convinced that the shock of such a sudden and such a tremendous increase of our burden would have checked, perhaps even reversed, the process of convalescence. On the other hand, I have increased taxation with a careful choice of method to such an extent as in my judgment will exercise a decided check upon any development of speculation or of feverish activity, without destroying or seriously impairing the present upward trend of national welfare.

CUSTOMS AND EXCISE.

CONTINUATION OF CUSTOMS DUTIES ON HOPS, ETC., AND ON BEER.

Motion made, and Question proposed,
That the period for which the following duties of customs are chargeable (which expires on the fifteenth day of August, nineteen hundred and thirty-seven) shall be extended by four years, namely—

(a) the duties now chargeable by virtue of Sub-section (1) of section two of the Finance Act, 1933, on hops, hop oil and extracts, essences or other similar preparations made from hops; and
(b) the additional duty chargeable in respect of beer under Sub-section (2) of that section."

5.20 p.m.

Mr. Attlee: I rise to congratulate the Chancellor of the Exchequer on the very clear and lucid way in which he has explained to us this, his sixth, Budget. We are given to understand that this is his last Budget. Six years is a very long time in which to be in control of the national finances. The right hon. Gentleman during those six years has set a new fashion in Budget statements. We have now departed from the exuberant rhetoric that we got from the right hon. Member for Epping (Mr. Churchill) and we are far away now from what must have been those interminable orations of Mr. Gladstone. We are now accustomed to businesslike statements, with very few high lights. The right hon. Gentleman spoke with a general air of gloom. We had, it is true, a bright interval when we had suggestions about amateur Chancellors, and we had a display of what I believe is now known as "strip-tease," in which we were kept in tantalising expectation of what was to come.
In the course of those six years the Chancellor of the Exchequer has gone round the full circle. He has moved back again to Bleak House and come back again to a full unbalanced Budget. When the National Government came in the charge against the Labour Government was that they had failed to balance their Budget and had raised loans to meet expenditure which ought to have been met out of revenue. We now have a Budget more completely unbalanced than any of its predecessors. £80,000,000 is to be met from loan. This is no temporary business. We are to have a series of unbalanced Budgets and a series of expenditures met from loans. In fact this is the first of a new series of war Budgets.

It was quite obvious from the Chancellor of the Exchequer's speech that the whole of his financial statement was concerned in the main with providing armaments and conducting the process in a war atmosphere. We are to have a sequence of war Budgets.
We have already profiteering on a very large scale. We are to have a new device to try and tax the profiteer. I shall make no attempt to judge how likely the Chancellor of the Exchequer's proposals are to be successful. I wish him luck in the endeavour to put salt on the tails of the profiteers. But I would draw this comparison, that when we last entered on a series of war Budgets the National Debt stood at £650,000,000. We are entering upon this new series of war Budgets with a National Debt approaching £8,000,000,000, and with the prospect of adding to that debt every year. At the time when we started the war Budgets the Income Tax was 1s. 2d. in the £,and to-day it is already 5s. In this new Budget of over £800,000,000 something like £540,000,00o are to pay for past wars or preparation for future wars.
It is said that this is to be the Chancellor of the Exchequer's last Budget. He is providing for an enormous increase in armaments, which, as he has explained, means a very large increase in upkeep every year. He is leaving a pretty nasty inheritance for his successor. It is rumoured that he is to be succeeded by the present Home Secretary. If that be true there is a kind of poetic justice in it, because he is very largely responsible for the conditions which give the excuse for this armaments Budget, and it is only fair that he should find the money to foot the Bill. He will probably be the most unpopular Chancellor of the Exchequer we have had for years, just as he was the most unpopular Foreign Secretary. This Budget marks the complete failure of the Government's policy. The right hon. Gentleman talked at the end of his speech of the kind of conditions that might prevail. I was reading to-day the report of Mr. Butler, of the Internaional Labour Office, in which he says:
All the financial commercial and social measures by which the crises of the past five years are being overcome are nothing but vanity if the whole political and economic fabric of our present system is under the constant menace of destruction by another international conflagration.


We have that in the policy that is being pursued which is marching straight on to another international conflagration. It is a policy which, to quote again the words of Mr. Butler, "involves an increasing sacrifice of the standard of life to the standard of arms." That is what this Budget marks. We are having rising prices, increasing the pressure on the poorest of the poor. They will be the people who will pay for armaments. We shall oppose this Budget because it is an expression of a foreign policy which is helping to ruin the world with results utterly fatal and hopeless to pursue at home and abroad.

5.27 p.m.

Sir Archibald Sinclair: I should like to associate myself with the eloquent and obviously sincere tribute which the Leader of the Opposition paid to the present Chancellor of the Exchequer, but I do not think that at this stage I could also associate myself with the welcome which he offered to the new Chancellor of the Exchequer, on the assumption that he will be the present Home Secretary. I think it will be better for us to wait and see. For the form and manner of the Chancellor of the Exchequer's statement we owe him an unqualified debt of gratitude and admiration. If the newspaper forecasts that this is his last Budget statement should prove to be true, it will no doubt be sincerely regretted by hon. and right hon. Members in every part of the House. The regret, at any rate on these benches, will be not in regard to the policy of the Chancellor of the Exchequer—because I have no doubt his successor will have to follow out a similar policy—but rather that we shall no longer have the advantage of listening to these masterly series of Budget statements, a regret which may be to some extent tempered, as far as those who have to follow him are concerned, by the fact that we have almost exhausted the stock of our superlatives in congratulating him on the lucidity and dexterity of his statements.
It is not of the form but of the substance of the Budget that very different emotions must be expressed. We have had a Budget of Great Expectations and a Budget of frustrated hopes. Now we have boxed the compass and come back to where we started, Bleak House again. If this is what is to be done in the green,

in the first year of the Government's rearmament programme, when trade is still in a favourable cycle, when the effect of rising prices is only just beginning to be felt, if we have to reconcile ourselves to a series of unbalanced Budgets, with Income Tax at 5s. in the £ and increased taxation of other kinds, what shall we do in the dry, when prices are soaring, when trade slackens, as it will unless the Government reverse their economic policy and take a lead in restoring overseas trade; when our borrowing comes to an end and the Budget has to be balanced, when an increased number of unemployed have to be provided for and a sinking fund has to be reconstituted for the protection of our credit? The increased expenditure on existing social services, without any addition to them, is progressive and automatic. The Chancellor of the Exchequer has explained clearly why in his opinion we cannot pay our way this year and why we must have an unbalanced Budget. He has not attempted to explain how and why we shall be in a better position in five years time to balance our Budget at the substantially higher level which we shall then have attained.
As regards the details of the statement, we shall have further opportunities of discussion. No doubt the most interesting feature of the statement was the proposal the Chancellor of the Exchequer made for meeting an expanding expenditure on measures of rearmament by a new and, as the right hon. Gentleman hopes, an expanding tax. He said he hoped that it would be a temporary tax. The same thing was said about Income Tax when it was first introduced. If indeed this tax, the provisions of which are necessarily complicated, is successful in dealing with the evils of profiteering, if it is successful in placing the unescapable burden of Defence expenditure on the backs of those best able to bear it, and we are satisfied that the tax is likely to have these results, we shall of course give it a most careful consideration. But, after all, it is an increment tax on productive industry, and surely the Chancellor of the Exchequer must feel that he would be in a much stronger position now if he had not in 2933 repealed the tax upon land, which would now be yielding invaluable revenue for his purposes without imposing a direct burden on productive industry. All these matters will be exhaustively debated during the


coming weeks. Meanwhile, let me follow the course which the Chancellor of the Exchequer has himself pursued in his series of Budget statements and come back to the point from which I started. Let me offer him my most respectful congratulations on a Budget statement which is worthy to rank as the last of a great series of statements.

5.35 p.m.

Mr. Maxton: I do not know whether it is a tribute to the success of the Chancellor of the Exchequer, but the House seems to be more empty and less anxious to listen to Opposition leaders than I have ever known it on a Budget night. Probably they are discussing in other places the new and ingenious devices which the Chancellor of the Exchequer has announced for dealing with the deficits he has to meet. I only want to add my word to what has gone before. I gather that this is something in the nature of a valedictory address. The Chancellor of the Exchequer says that he has had six years at his job. He has certainly had a great variety of situations to face in those years. I remember on one occasion, when a colleague of the Chancellor of the Exchequer was addressing the House, I asked the hon. Member next to me what were the qualities which the hon. Member who was addressing the House possessed which justified us in having him in an important position. My colleague said that he had one very great quality, the quality of being able to get away with it. The Chancellor of the Exchequer has shown that quality during the six years. He has always been able to get away with it, and as far as one can judge from newspaper rumours he is going to get away with it more successfully than many of his predecessors. The Back Benches of the House are strewn with ex-Chancellors, and in another place there are one or two odd lots. I understand that the Chancellor of the Exchequer is going to get away at the psychological moment; he is going to get away, to use a slang phrase, while the going is still good.
There is one thing upon which I have been pondering much during the last year or two. Not only do we seem to get away with financial operations which 20 years ago would have been regarded as completely impossible, but other

nations also get away with it too. Nations which have been actually bankrupt two or three times in the post-War period are still going on. I do not know how the books are manipulated, but they always seem to be able to keep their head above water and to be able to launch armaments schemes big enough to make this nation go ahead with armaments schemes. The only conclusion I can draw from it is that there is a tremendous power of wealth production which is so unlimited that a nation is prepared to take on anything in the way of expenditure, provided it can manipulate books and figures with sufficient skill. In these circumstances the only further thought I want to put before the Committee is this. If it be that our productive power is so tremendously great to-day, there seems to be no justification whatever for the fact that the overwhelming mass of the population of this country is living either in poverty or in circumstances which do not lead to freedom in life. I should have thought that in his Budget arrangements the Chancellor of the Exchequer would have made some provision for a definite uplifting of the conditions of life of the poorest sections of the population. Perhaps he feels that as Chancellor of the Exchequer it is not necessary to do that, and that in the more important position which may come to him in the future he will be able to do greater and bigger things in the direction of social amelioration.

Viscountess Astor: Does not the hon. Member agree that all the reforms and the wonderful things which have been done by the Chancellor of the Exchequer have meant a great uplifting of the poorer classes?

Mr. Maxton: If all the things that have been done by anybody during the last 20 years are added together they do not do more than scratch the surface of the poverty problem. However, I am not going to refer to that; I am simply going to congratulate the Chancellor of the Exchequer on his Budget statement.

5.41 p.m.

Sir John Wardlaw-Milne: There is no doubt that hon. Members in all parts of the House will desire to join in the congratulations which have been offered to the Chancellor of the Exchequer not only on the delivery of his sixth Budget speech but upon the long series of successful


Budget speeches in this House. Apart from these congratulations, however, I thought that the right hon. Gentlemen who lead the two main Oppositions found themselves in a position of some difficulty. It was extremely difficult for them to criticise the Budget at all, and I am not surprised. Their brightest hopes must surely have been realised when they heard the Chancellor of the Exchequer turn to that portion of the Budget to which he gave a new and attractive name but which most people will describe as a reimposition of the Excess Profits Duty. This is not the occasion to go fully into details regarding the Budget proposals, and I am not qualified to do so at the moment. They will require very careful study indeed, but when I heard the Chancellor of the Exchequer put forward that particular proposal I wondered whether he appreciates—although it is ridiculous to suppose that he does not—the amount of trouble and worry that is going to be brought upon trade and industry by this tax. When he came to the Budget figures which make it necessary to impose this tax, I noticed that the cause of the deficit of £14,000,000 was the falling off in the estimated receipts from miscellaneous taxes from £24,000,000 to £11,000,000 in the coming year.
The Chancellor of the Exchequer did not tell us, except in connection with one item of £5,000,000, why he expected this tremendous deficit of £13,000,000, which is practically equal to the amount he has to make up by new taxation. I am not suggesting, and indeed it would be absurd to do so, that it is not necessary to make up the figure of £13,000,000, but when you get £15,000,000 in a full year from an increase of 3d. in the Income Tax it seems a little hard on the top of that to put on the traders of this country an Excess Profits Duty which in the immediate future will bring in a very small return. We do not know what the conditions may be a year hence. Perhaps then it may be necessary to raise a further £20,000,000 but if so we are really adding 4d. to the Income Tax.
The Chancellor of the Exchequer's speech dealt largely with the improved conditions in the country and I think he was perfectly entitled to take a great deal of the credit to the Government for the increasing prosperity which we are enjoying. I do not want to minimise the ad-

vance which industry has made, the very much better conditions which the country is enjoying at the present moment, the higher wages and the shorter hours as compared with a few years ago, and I say at once that this Government has a great deal to its credit in that connection. It is the confidence which the right hon. Gentleman's policy has brought to trade and industry that has made this increased prosperity possible. At the same time I sometimes wonder whether our prosperity is quite as widespread and well founded as people think. Anybody who reads the League of Nations Committee's returns on world production and exports will see that in all countries there has been a great increase in production, but that there has not always been a corresponding increase in exports. Although I have the greatest admiration for the work which the Treasury has done in connection with the Exchange Equalisation Account and other measures, particularly the agreement with the United States and France which was come to last September, and which has done so much to equalise exchange rates, the plain fact remains that we cannot get back our export trade until and unless we can get stable money values based on an international price level. That we have not yet got.
The reason why I make that reference is that until we get that, to my mind we shall not get that expansion of exports which is essential to real prosperity. We are, by the Chancellor's proposals, putting upon a certain section of the population a further tax which it may not be able to meet if the prosperity of which we speak so much does not reach the heights for which we all hope. Moreover, this taxation will fall mainly upon a certain class of people; it will fall upon the holders of the equity of the business; the same class who mainly pay the extra threepence in the Income Tax will pay this extra taxation on profits. This taxation will fall very largely upon the ordinary shareholders in these companies. To some extent, at any rate, they are the people who have already during the past two years lost about £100,000,000 owing to the conversions of War Loan to a lower rate of interest, and they have probably benefited very little from the extra £180,000,000 per annum by which our Social Services have


increased in the past 10 years. They will pay this taxation, with almost the highest rate of Income Tax known, at a time of increased, and not reduced, prices which hit them as well as everybody else.
The main point that I wanted to make this afternoon is simply this: I am as anxious as everybody in the House that taxation should be spread evenly, but I think this proposal of the Chancellor is very hard upon a certain section of the people. It is true, as he says, that it follows only upon rising profits, and if we could be sure that prosperity was certain to continue, possibly we should be able to face this proposal with more equanimity. Is it possible that the proposal is put forward as a means of preventing expansion going too fast? We read of what happened in America, and it may be that my right hon. Friend thinks this is a very good way of suggesting that the advance in prices should not go too fast, and of putting a damper on the rate at which prosperity is growing. That may be good or bad—I am not dealing with that point to-day—but I was interested to note the attitude of the Opposition when the proposal was being put forward by my right hon. Friend. There was great satisfaction, I thought, that again something like the capital levy—I heard that whispered across the House—was being introduced.
I wonder whether hon. Members opposite realise that this may not only be a tax on profits, but may also be an unfortunate damper on the movement towards increased wages. That would be one of the worst things that could happen in this country. I have always held the view that labour was entitled to receive a larger share of the profit of industry, but it may well be that this tax proposal may be against progress in that direction rather than a measure which will help it to go forward. In conclusion, I congratulate my right hon. Friend very much on having introduced his sixth Budget, but I am bound to say that he would have received from me, at any rate, even greater admiration and respect than I already have for him for his wonderful work in that position—especially in connection with the Exchange Equalisation Account and with other measures to bring about prosperity and to give confidence in the country—if he had not found it necessary to introduce

this special form of tax upon profits which may, I fear, be a drag upon industry and possibly slow down that expansion, both in profits and wages, which we all want to see.

5.52 p.m.

Mr. Tinker: Probably this is the last time the Chancellor will introduce a Budget. Considering the vast expenditure caused by the Defence programme, we had all expected that he would have to look for some new sources of revenue, and I was not disappointed in my expectation because I had anticipated that the first source to which he would go would be the Income Tax. If the Defence programme is necessary, those who have the greatest amount of wealth should be called upon to pay towards it. I think no one can argue against that. I had expected also that the right hon. Gentleman would have gone to the Super-tax, and I think he might have reduced the limit from £2,000 to £1,500. I hope that at some future time that will be done.
Another matter of satisfaction to me was that the right hon. Gentleman did not increase the Medicine Stamp Duty. I have received several deputations who wondered whether he would not put something on the Medicine Stamp Duty, and I am glad that he has considered the matter and decided against doing so. One thing which strikes me is that every time the Chancellor makes a Budget statement, he has to refer to some loopholes by which wealthy people find ways and means of avoiding the payment of tax. It is deplorable that he should have to speak of that year after year, and try to find means of closing the loopholes by which these people, who ought to be more public-spirited, evade the tax, instead of paying it, as it is their duty to do. I was not quite clear as to the meaning of his remarks in this respect, but I shall watch with interest to see what is the full extent of the measures.
As to profits, I had prepared a speech on that subject, but the Chancellor has anticipated me, and I am very glad that he has done something in this matter. Hon. Members know what happened during the War period. I have figures drawn up by the committee set up by the Inland Revenue authorities which show that during the War period 360,000 people increased their fortunes by


£3,000,000,000, which means that, taking an average, each person increased his fortune by about £9,000 as compared with the pre-war figure. To me it seems to be out of all reason that that sort of thing should have gone on at a time when thousands of our people gave their all to save their country. They went out with no thought of profit, but solely to save their country; and even now many hon. Members have to deal with cases of men who are still suffering from that.
The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) said that this tax might react on the working classes, but can tell him of a way to avoid that. The Chancellor has given a figure of profits, and all profits above that limit will be taxed. I would say to the leaders of industry that when they reach that figure they should see that their work-people get some of the increased profits by increasing their wages. That could easily be done. Moreover, there is now agitation for holidays with pay. The people making these increased profits will have the opportunity either of giving something to the Chancellor or of handing something back to the workpeople, and that is why I am glad the Chancellor has made the proposals.
I would like now to refer to the Chancellor's remarks about general prosperity, because I am not quite satisfied on that point. I have here a resolution passed by the Miners' Conference in Lancashire requesting us to ask for an increase in unemployment benefit on account of the increased cost of living. When the Chancellor speaks of increased prosperity, I want him to bear in mind that prices are soaring and that the cost of living has gone up. Last week, in the Debate on malnutrition, various figures were given, and it was said that the cost of living had increased by 12 per cent. during the last 12 months. I have been looking at the figures, and I find that it has increased by about 8 per cent. in that period. The people with a fixed income feel that increase more than anybody else. The captains of industry who make increased profits do not feel it, and the wage-earning class try to get higher wages, so that they will not feel the burden as much as those with fixed incomes.
For instance, an unemployed man receiving a fixed rate of benefit, either

standard benefit or unemployment assistance, of £1 finds that that is worth only 18s., if one takes the increased cost of living as being 10 per cent. The general prosperity cannot be said to help him. The people getting an old age pension of 10s. a week do not feel the benefit of this increased prosperity. If there is general prosperity, one would have expected the Chancellor to have done something in that respect. I think he might have done something for those having fixed rates of income, and not have left them alone. In a speech which he made on 5th March, he dealt with this point, and said that with all the new expenditure it was difficult to contemplate any new scheme in social services which would cost a great deal of money in the course of the next few years, although of course the Government were not going to abandon any principle of the social programme laid down.
There are one or two points which I think the Chancellor, or whoever follows him, ought to keep in mind. In a country such as ours, after all, we must have regard to all classes of the community, and when there is general prosperity not leave one section much better off than another. There are one or two cases I wish to bring to the notice of the House, and although perhaps they cannot be dealt with at this time, they should be borne in mind. I wish to refer, in the first place, to those old age pensioners who have arrived at the age of 65 and whose wives have also reached that age. The general prosperity cannot come to them when they are off unemployment and are reduced to l0s. In answer to a question last week it was stated that there were approximately 140,000 wives of this class whose husbands have reached 65 and where the wife is not 65. To pay 10s. a week to the wife would cost. £70,000 a week, or £3,600,000 in a full year—not a very big item in a Budget of the dimensions of the present one. It would, however, be a tremendous thing for these old people, many of whom are driven to the Poor Law in order to get a little more. These old people have done so much to help the country forward, and they should have some recognition when we are reviewing the financial state of the people who have to meet the increased cost of living on a fixed rate of income.
During the last few weeks I have had brought to my notice rather vividly a case concerning widows' pensions. It may not be generally known that the pre-Act widows, as I term them, that is, women who became widows before 1926, are given 10s. a week if they have a child under 16. When the child turns 16, the widow's pension stops. In 1929 that was altered so that the pension was given to the widow when she became 55, I have had several cases brought to my notice where the youngest child has reached 16 and, because the widow has not reached 55, the pension has stopped. We talk about giving the children, a chance, but in such cases the children are driven to blind alley occupations in order to get what they can to help the homes. There are 40,000 widows in this position, and to continue their pensions would cost £20,000 a week, or just over £1,000,000 a year. If the Chancellor believes in general prosperity, he ought to pay attention to the lower strata of society and not always have his eye on the richer classes. The lower strata have not the ability or the education to make themselves heard, whereas the higher grades are able to bring to the notice of the Chancellor the things that they want to have redressed.
I recognise that these matters cannot be dealt with in the present Budget, but when we have a grievance we want to take the opportunity of bringing it before the Chancellor so that it may be noted by the Government for the future. I hope that whoever occupies the position of Chancellor in future will deal with general prosperity in a much wider aspect than the Chancellor has done in his Budget this year. We cannot expect that, when the financial statement is read to-morrow, the classes I have mentioned will take much joy in being told that, after all, they have not to bear any extra burden and that the burden has gone on to the people who pay Income Tax. I hope that when the Chancellor gets into his new position, when he is in the highest place in the land, he will pay some regard to the points I have brought before him. If he does, he will earn much gratitude from the people I have mentioned.

6.5 p.m.

Mr. Boothby: When my right hon. Friend the Member for Epping (Mr.

Churchill) was Chancellor of the Exchequer, he said to me at the time I was his Parliamentary Private Secretary, "I can never understand why more backbenchers do not take the God-given opportunity that is presented to them for airing their financial views immediately after the Budget statement, It would be a great bore for me, but it would be a great opportunity for them." At the risk of boring my right hon. Friend the Chancellor of the Exchequer for a few moments, I rise while the going is good from the point of view of a back-bencher to put one major point with regard to the Budget statement which he has just so brilliantly made for the sixth time. My right hon. Friend has presented to us what can only be described as a war Budget; and I think he was justified in doing that because at the moment we are engaged in armament construction almost upon a war scale, and also in economic warfare of one kind and another. My right hon. Friend is proposing to impose serious burdens upon the taxpayers, and it is no good the Committee trying to blink that fact. When his proposals are read by the business community of the country to-morrow, they will come as something of a shock. I do not suggest that that in itself is necessarily a bad thing, or that it may not in the long run prove to be salutary rather than otherwise.
But I do want to point out that this Budget is based on two assumptions, and can only work if those two assumptions are in fact borne out. The first assumption is that we shall have a continuance of the upward trend of commodity prices, and the second is that we are to engage for two or three years in a programme of continuous and heavy rearmament. As long as those assumptions are correct and are borne out, we can borrow on reasonable terms for capital expenditure, we can impose these terrific burdens without undue cost to the business community or the taxpayer, and we can insulate our national economy by a system of high protection such as we have at present. So far as rearmament is concerned I was glad to hear my right hon. Friend say that this is a suitable moment for discouraging all unnecessary constructive expenditure, so that if and when the rearmament programme slackens down, we shall be able to take up other work. Also, I think it will be necessary at that


time to apply our minds very seriously indeed to the development of overseas trade.
The main point I want to put to my right hon. Friend to-night is that we are operating to-day in this country, and indeed throughout the world, a new and untried economic system. We have large gold reserves, and so have certain other countries, and the leading currencies of the world are not too firmly attached to them. We have to proceed by a process of trial and error, and that is what my right hon. Friend has done so successfully in the past. But great care is necessary. It is also necessary to look ahead. I firmly believe that it would not take as much as many people think to bring to an end the whole upward trend, to cut short the whole process of revival, and to put us instead into what I may describe as a deflationary spiral. If, for example, any serious proposals were made in this country, in the United States, or in France to lower the currency price of gold with a view to lowering commodity prices, that would immediately precipitate an economic crisis of the first order, and a world disturbance of the kind referred to in the Budget statement of my right hon. Friend. If that disturbance came about it would not only wreck this Budget, but might even precipitate a world war.
While it is necessary to check undue speculation, it is still more necessary to avoid a fall in prices and the risk of turning the whole of our economic machinery into the opposite spiral. A mere rumour the other day was sufficeint to cause a flurry in the markets of the world which must have caused serious anxiety to the people who have to operate this very delicate modern monetary machinery. For this Budget to succeed and to do no harm, and, indeed, for the capitalist system to succeed, there must be a slow but continuous rise in commodity prices, accompanied by a proportionate rise in wages. I would point out to those who are frightened about the rise in commodity prices that they are still comparatively low, being only approximately 52 per cent. of the 1927 level. If you take into account the depreciation of currencies, they have only quite recently regained the low level of 1931. Falling commodity prices and their consequence, trade contraction and restriction, paralysed the whole economic system of the world in

1930 and 1931, and brought about the greatest economic crisis the world has ever seen. If this Budget is to succeed we must not even contemplate a repetition of the deflation to which we were subjected in 1929, 1930 and 1931, because deflation is economic death in the long run. Meanwhile, rising prices and expanding trade have already lowered the tension—even the tension in political and foreign affairs—and, in spite of Spain, we have seen some mitigation of the stresses and strains of contemporary political life, and has also helped to make this Budget possible.
At the same time, I would say to my right hon. Friend that the world economic structure is getting dangerously lopsided. The gold production of the world goes on at an enormous rate in South Africa, Russia and all the gold-producing countries. It has almost doubled between 1929 and 1936. That gold, however, is no better distributed in the world than it was five or six years ago. The bulk of it is held by the United States, France and ourselves; and comparatively small amounts by Belgium, Switzerland and Holland; and, relatively speaking, none by the rest of the countries. We cannot expect a revival of international trade, or of world confidence, until we get a better distribution of gold throughout the world. We do not want to press those countries that have no gold to desperate courses; and the only way to get a better distribution of gold is to bring about a real well-founded revival of international trade. It is essential both on economic and political grounds, if we are to get through in the long run. It is necessary if our civilisation is to survive; and I am sure that hon. Members in the Liberal party will agree when I say that.
We want first a redistribution of gold, we want at the same time the removal, so far as possible, of present exchange restrictions, a restoration of the credit of those nations and countries which at present possess no gold and little credit, and a reduction of trade barriers all over the world. The alternative is an increase of the pressure, and of the intolerable burden of armaments; and one of the reasons why I am glad that the Chancellor has not let us off this afternoon is that it will bring home to this country what an intolerable burden armaments are. It will impress everybody in all parts of the country, and, I think, in other countries


as well, with the necessity, for the sake of the world, for the sake of the masses, of another effort to try to stop this wretched race in rearmament.
But I do not believe that we shall get disarmament until we get first of all a measure of economic disarmament, some revival of international trade, a measure of international economic co-operation: that must surely precede political and military co-operation. My right hon. Friend is relying very largely at the moment on a committee called the Foreign Transactions Advisory Committee to advise him in these matters. That committee has in my submission neither adequate powers nor adequate terms of reference for the times. A far wider conception is now wanted. The Chancellor of the Exchequer has, in my opinion, now got to take into consideration himself the question whether we should not revise our foreign lending policy, whether it would not pay us in the long run seriously to consider giving even gold loans to certain countries abroad with whom we wish to re-establish trade, to take the place of rearmament when rearmament, as we all must hope and pray, comes to an end. If New York will not do it, why should not London do it, and become once again a magnet for the world's capital? In the long run that is, I believe, the great function not only of this town but of this nation. Do not let us ever forget that our greatness was founded on international trade, and in the long run can be retained only through international trade.
One or two encouraging indications of the trend of events have appeared lately. There was Dr. Schacht's visit to Brussels the other day, and his observations to M. Van Zeeland which contained some remarkable things such as I do not think he would have said six months or a year ago. There is M. Van Zeeland's mission itself, to which I believe my right hon. Friend has given his approval. My hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) in his interesting speech urged the necessity for getting back to stable money values. We cannot do that without international cooperation, and I would say to my right hon. Friend that I hope he will, during these Debates, make some brief reference to it. I would beg him to lose no opportunity of bringing about another inter-

national economic conference, not perhaps so large or so ambitious as the last one, which failed; but there should be an effort to get at least certain essentials, such as currency and exchange restrictions, settled in order to open up the way for that revival of international trade which is so necessary, as I think, for our survival.

6.19 p.m.

Mr. Loftus: I only intervene because of the speech of my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) and because of his condemnation of the proposed National Defence contribution tax. I welcome that tax. I am greatly relieved to hear the proposal, because for some time past I have felt anxious about the financial position of this country, in this way. One thing which I fear is a wild speculative boom followed, as my right hon. Friend said, by a slump. I remember coming home on leave during the War in 1917 and 1918 and finding a cynical atmosphere of grab, the idea that there was unlimited Government money about and with almost everybody trying to get the utmost share of that money. It was almost a hysterical atmosphere of profiteering in 1917 and 1918. I do not suggest that there is a similar atmosphere at present, but there are certain symptoms and tendencies which cause disquiet, and I felt that what was wanted to steady the nation was to make it realise by taxation that the great National Defence loan is not a bonus for distribution but is a burden, that it is the duty of the whole nation to realise that this is not a time of unlimited spending but a time when we have to concentrate on building up our defences and, therefore, to sacrifice other things. I feel that 3d. on the Income Tax will make the nation as a whole realise it, but still more will this proposed new tax, this new form of Excess Profits Duty. For myself, I believe that it is probably the least objectionable type of tax. It will only operate where greatly increased profits are made, and those profits will probably have been made, either directly or indirectly, as a result of the Government's expenditure on National Defence.
I disagree with my hon. Friend the Member for East Aberdeen (Mr. Boothby) when he says that the only hope lies in continuously rising prices and a proportionate rise in wages. I


suggest that we want a rise in prices, but not a continuous rise, and that when we get a satisfactory price level we ought to endeavour to stabilise it.

Mr. Boothby: I said that what we wanted now was a slow continuous rise. Ultimately, stability is the goal.

Mr. Loftus: I think the hon. Member will agree that the rise has been unduly rapid—

Mr. Boothby: No.

Mr. Loftus: —and that a stable influence is now required.

Mr. Boothby: If my hon. Friend had owned any commodities during the last week he would not be saying that.

Mr. Loftus: The last week I except. But I will not pursue that point. We have to recognise that not only is the burden of rearmament very heavy on the nation but that our social services automatically increase, getting heavier year by year, and that there is only one way to make the burden easier, and that is to increase national production so as to spread the charge, to make the percentage of national wealth taken in taxes a lesser amount and a smaller percentage. If we steadily increase national production I think we should also keep our price level stable. If the price level were to fall, obviously the burden of taxation expressed in terms of money would increase heavily. I apologise for intervening in a Budget Debate on the first day, but I repeat the great fear which I had that the country is getting into a state of speculation, of dangerous speculation, and I felt that some steadying steps were needed. I desire above all to see a stable price level maintained, and one of my greatest desires in political life would be somehow or other to see the achievement of conditions which would obviate the misery and the danger caused by depression and by slump to all classes of our people.

6.26 p.m.

Mr. Radford: I can assure the Chancellor of the Exchequer that my remarks will be of such a simple and elementary nature that they will occasion him no added strain after the ordeal he has gone through, and so successfully, this afternoon. There is one omission from my

right hon. Friend's proposals which has been a big disappointment to me. I had hoped there would be a tax on cosmetics. Seriously, I was looking forward to it. Such an indirect tax would have been free from the difficulties which attach to many indirect taxes through the law of diminishing returns. If the Chancellor had thought fit to impose such a tax he could have ignored the possibility of diminishing returns, because the tax would have operated either as a revenue producer or as a deterrent, and for my part I should prefer that it had operated as a deterrent. I welcome very sincerely the Chancellor's further references to stopping tax evasion. At the risk of being egotistical I may that that 10 years ago I was, I think, instrumental in getting my right hon. Friend the Member for Epping (Mr. Churchill), who was then Chancellor of the Exchequer, to tighten up the Surtax law, and anything in that direction I welcome very sincerely, because any evasion means that an additional load is thrown on to the backs of those who do not evade.
The National Defence contribution is too big a subject to touch upon this afternoon. It has much to commend it, and it has, of course, some of the objections which attached to the old Excess Profits Duty. The hon. Member for Leigh (Mr. Tinker) seemed to suggest that employers might treat their work-people very generously, because it would cut down the amount of profit on which they would have to pay the excess profits contribution. That is just scratching the surface of some of the old evils of the Excess Profits Duty of 17 years ago. I am sure there is no man who likes to hear compliments less than my right hon. Friend, though he has heard many this afternoon, and they have been well deserved, but I cannot help feeling that it must be a big disappointment to him that after six years as Chancellor he is unable, through no fault of his own, to give the nation reduced taxation. I could not help carrying my mind back to the similar position in which my right hon. Friend the Member for Epping found himself in his last Budget when, owing to the coal stoppage and the general strike of the preceding year, all his carefully laid plans were brought to nought. I am sure that it would have been a great joy to my right hon. Friend if he had


been able to terminate his long and honourable career as Chancellor of the Exchequer by submitting proposals for reduced taxation, and I am very sorry that through no fault of his own he has not been able to do it.

6.30 p.m.

Mr. Annesley Somerville: Nothing was more remarkable than the warmth with which Opposition Members greeted the two main proposals in the Chancellor's Budget. They cheered the proposal to add 3d. to the Income Tax and they cheered still more warmly the National Defence contribution. The attitude of their Leader was in striking contrast. Listening to those cheers, he must have said to himself: "This will never do. Something must be done about it." So, after a brief tribute to the Chancellor, he made some bitter and rather personal remarks about the occupants of our Front Bench. The other Opposition Leader was a little more generous in his tribute, but he could not help saying that nothing would be right until we had reverted to his own Free Trade doctrine. He did not remember that because of the agreements that have been made by this Government with other countries, the trade of this nation has been made more free than it was.
Our trouble is that we have to rearm. There is no question about it. Hon. Members opposite may say that we need not have rearmed if we had upheld the doctrines of collective security, but that is a will-o'-the-wisp. It is very easy to talk about it but very difficult to attain it. It is not attainable. Therefore we have to rearm. We have to spend a great deal of money, and some people in this country will make profits out of that spending. The new National Defence contribution will be a safeguard. It will be a guarantee that people who make the most profits out of the expenditure on armaments will pay the most of this new tax. It will be a guarantee to the workers that undue profits are not being made out of their efforts. I congratulate the Chancellor on his courage. It may well be that when the story of these six years is written, this Budget will be regarded as the most courageous of all.

6.33 p.m.

Mr. Marcus Samuel: I would take the opportunity of saying a few words while

the Chancellor of the Exchequer is still in the Committee. I would congratulate him once more upon producing a sound and satisfactory Budget. His record shows that, even at this time, balanced Budgets can be produced by relatively orthodox methods. There can be no question that the return of confidence, with the attendant improvement in industrial and commercial conditions is, in no small measure, due to the manner in which the Chancellor has done his job year after year, and it is a triumph that he should find himself able to finance a staggering rearmament programme without impairing our credit.
The purpose of my rising is not merely to give a well-deserved general eulogy, but to make what I hope are concrete suggestions for the solution of a very tragic problem. The swelling tide of industrial revival has barely touched the shores of this distressed area. There are still hundreds of thousands of unemployed, for many of whom the prospect of getting a job has improved but little during the last 10 years. In some districts the improvement is nil. When faced with such a problem, the canons of orthodoxy are of less importance than practical results, although long experience has proved orthodoxy to be, in the main, the most satisfactory and effective manner of approaching the problem; but if, after treading the path of orthodoxy, we have but arrived at the distressed areas, some departure is clearly called for. I have just returned from a visit to South Wales which I made for the express purpose of visiting Merthyr Tydvil and other stricken towns. I did not go further than Merthyr Tydvil. I went for the sake of impressions, and I got them, and I returned to the same ideas, strengthened and reinforced. It seems to me that this is a problem in which concrete ideas are of more importance than emotion. I propose to analyse as shortly as I can what appear to be the more important elements involved.
The first point is that it is now beyond dispute that the prime characteristics of the depression in these areas are quite apart from the ordinary trade cycle. There is the bringing about of dereliction which, in most of those benighted towns, has been unvarying for a decade or more. If the marked improvement throughout


the rest of the country is in no way reflected in those areas, some measure beyond the measures already in force, is clamant. The first element is that of permanence; the second is of different application. It is obvious that the procuring of new industries in those areas must be the major part of the solution. Mere palliative measures are of secondary importance and utility. In the proposal for bringing new industries to those localities, two things stand out most prominently. The first is the adequacy of the labour. There are men whose hearts and souls have been clamouring for employment, and who are prepared to welcome with outstretched arms every opportunity offered to regain their moral self-respect. The second thing in favour of those areas as locations for industry is that the cost of living is very much lower than in London or Birmingham. It is said that the cost of living is from 10s. to 15s. a week less in those areas than in London, by reason of cheaper rents and similar matters. It was stated recently that the standard of living of unskilled workers in London was often lower than that of similar unemployed workers in the Special Areas.
In the past, many suggestions have been made that the Government should offer inducements to industry to commence operations in the depressed areas. Those suggestions have taken many forms, the most popular of which is for the relief of rates, rent and taxation, with special grants. The Chancellor has accepted some of those suggestions in principle. It will be noticed that all of them partake of the nature of a subsidy. There are, ordinarily, overwhelming objections to subsidising one part of industry as against another. If, for instance, there was a possibility of establishing a subsidised boot manufacturer in South Wales, it is clear that he would be obliged to engage in unfair price cutting against Northampton, to the great detriment of the latter. This has always been an insuperable problem, and it has been the principal stumbling-block of the Government.
Attention has been directed in recent months to certain other things which may be a means of surmounting the obstacles to a subsidy such as that which I have mentioned. The Prime Minister and the President of the Board of Trade have

shown concern at the greater concentration of our manufacturers upon our protected home market and their increasing neglect of the export market, which, in the long run, is of equal importance. The protected home market has combined with the armaments programme to such an extent as to absorb all that certain manufacturers can produce, and they have no necessity to endeavour to hold a highly competitive or a more competitive foreign market; but we must not trust to luck. It would be exceedingly unwise if we were to lose the export trade. The problem of retaining our export trade may be related to the problem of the depressed areas. If an inducement were offered to manufacturers to make goods for export only, the establishment of their subsidised factories in the depressed areas could be a cause of complaint to none except their foreign competitors, with whose sorrows we are not very concerned.
For years, unsubsidised, we have been competing against subsidised industries whose wage scales were lower than ours, whose hours of work were longer and whose social services were in no case comparable with ours. I earnestly commend this suggestion to the Government, because it is imperative that something should be done to hold our export trade. If the Government must intervene in these matters, they can kill two birds with one stone. I am not in favour of intervention in Spain, but I am in favour of intervention in the depressed areas, for the sake of the workers and because of our endangered commercial position in the world. As to the manner in which trades producing for export could be attracted to the depressed areas, alternatives are numerous, but the main thing is that those methods should be simple, workable, and beneficial alike to labour, employers and the community.
One other point appeals to me. The permanency of the unemployment in some of the depressed areas is such that no reduction can be anticipated in the charges on the Unemployment Insurance Fund in respect of them. Assuming that the Government were prepared to subsidise in the way that I have suggested, why should it not be done by payment to employers out of the fund of a sum equivalent to at least half what the wage-earner would get had he not been employed? That subsidy could operate


solely in the depressed areas and only in respect of export trade. This scheme would answer the usual objection that the Government would be making permanent payments in respect of men who might not remain permanently out of work. The men who get back to employment are those who have been permanently out of work. There is no glimmering of hope for people such as those in Merthyr Tydvil.
In addition, the subsidy itself, if applied in the way I have explained, would not be open to the usual objection that it would unfairly assist one part of an industry against another in the home market. Another fact to which I would draw the attention of the Committee is that married men with families would be the first to get beneficial occupation, and the relief to the country thereby would be very great. Moreover, such a scheme could be put into operation for the assistance of new industries such as the manufacture of calcium carbide and other products which are not made in this country and which are required by other industries, thus absorbing a large number of men for whom at the moment there is no hope of any employment for years to come. I hope that the Chancellor of the Exchequer will consider whether some such scheme could not be adopted. The idea is not, I believe, original, but hitherto it has been considered to be impossible on the ground that home industries would be competing with one another; but, if my suggestion were adopted, it would not involve the financing of some home industries at the expense of others, and it would benefit our export trade.

Question put, and agreed to.

AMENDMENT OF OTTAWA AGREEMENTS ACT, 1932, AS RESPECTS CANADA.

Resolved,
That the Ottawa Agreements Act, 1932, and any other enactments relating to customs which amends or relates to that Act, shall have effect, as from the date on which the Agreement made on the twenty-third day of February, nineteen hundred and thirty-seven, between His Majesty's Government in the United Kingdom and His Majesty's Government in the Dominion of Canada comes into force under Article 17 thereof, as if that Agreement were substituted for the Agreement set out in Part I of the First Schedule to that Act.

REDUCTION OF CUSTOMS DUTY ON SILK STOCKINGS AND SOCKS, BEING EMPIRE PRODUCTS.

Resolved,
That—

(a) as from the twenty-first day of April, nineteen hundred and thirty-seven, with a view to the fulfilment of the Agreement made on the twenty-third day of February, nineteen hundred and thirty-seven, between His Majesty's Government in the United Kingdom and His Majesty's Government in the Dominion of Canada, the preferential rate of any new duty of customs chargeable under Section nine of the Finance Act, 1933, on any article to which this Resolution applies shall not exceed whichever of the two following rates is the higher, that is to say, twenty-eight and eight-ninths per cent. of the value of the article or eight shillings per pound weight;
(b) the articles to which this Resolution applies are stockings and socks made wholly of silk, or containing silk components the value whereof exceeds twenty per cent. of the aggregate of the values of all the components thereof, and being Empire products within the meaning of Sub-section (1) of Section eight of the Finance Act, 1919, as amended by any subsequent enactment.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

EXEMPTION FROM CUSTOMS DUTY OF REED ORGANS, BEING EMPIRE PRODUCTS.

Resolved,
That, as from the twenty-first day of April, nineteen hundred and thirty-seven, with a view to the fulfilment of the Agreement made on the twenty-third day of February, nineteen hundred and thirty-seven, between His Majesty's Government in the United Kingdom and His Majesty's Government in the Dominion of Canada, the duty of customs chargeable under Section three of the Finance Act, 1925, shall cease to be charged on reed organs (including harmoniums) imported complete, being Empire products within the meaning of Sub-section (1) of Section eight of the Finance Act, 1919, as amended by any subsequent enactment.
And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

AMENDMENT AS TO UNLADEN WEIGHT OF GOODS VEHICLES.

Resolved,
That, as from the first day of January, nineteen hundred and thirty-eight, the unladen weight of a goods vehicle shall, for the purposes of any duty of excise chargeable in respect thereof, be taken to include the weight of any receptacle placed on or in the vehicle for the purpose of the carriage of goods or


burden of any description, if any goods or burden are loaded into, carried in and unloaded from the receptacle without the receptacle being removed from the vehicle.

INCOME TAX.

CHARGE OF TAX.

Resolved,
That—

(a) Income Tax for the year 1937–38 shall be charged at the standard rate of five shillings in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;
(b) all such enactments as had effect with respect to the Income Tax charged for the year 1936–37 shall have effect with respect to the Income Tax charged for the year 1937–38.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

HIGHER RATES OF INCOME TAX FOR 1936–37.

Resolved,
That Income Tax for the year 1936–37 in respect of the excess of the total income of an individual over two thousand pounds shall be charged at rates in the pound which respectively exceed the standard rate by amounts equal to the amounts by which the rates at which Income Tax was charged in respect of the said excess for the year 1935–36 respectively exceeded the standard rate for that year.
And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

PREVENTION OF AVOIDANCE OF TAX BY CERTAIN TRANSACTIONS IN SECURITIES.

Resolved,
That—

(1) where the owner of any securities agrees to sell or transfer the securities and by the same or any collateral agreement agrees, or acquires an option which he subsequently exercises, to buy back or reacquire the securities or to buy or acquire similar securities, any interest which, as the result of the transaction, is receivable otherwise than by the owner shall, whether it would or would not have been otherwise chargeable to tax, be deemed for all the purposes of the Income Tax Acts to be the income of the owner and not to be the income of any other person, and, if payable without deduction of tax, shall be chargeable to tax at the standard rate under Case VI of Schedule D:

(2) where a person carrying on a trade which consists wholly or partly in dealing in securities agrees to buy or acquire securities and—

(a) by the same or any collateral agreement agrees, or acquires an option which he subsequently exercises, to sell back or retransfer the securities or to sell or transfer similar securities; and
(b) as the result of the transaction receives any interest which becomes payable in respect of the securities;

no account shall be taken of the transaction in computing for any of the purposes of the Income Tax Acts the profits arising from or loss sustained in the trade:
(3) for the purpose of this Resolution—

(i) the expression 'interest' includes a dividend;
(ii) the expression 'securities' includes stocks and shares;
(iii) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest, and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred."

AMENDMENTS AS TO SURTAX ON UNDISTRIBUTED INCOME OF CERTAIN COMPANIES.

Resolved,
That there may be included in any Act of the present Session relating to finance such amendments of Section twenty-one of the Finance Act, 1922 (which relates to Surtax on the undistributed income of certain companies), and of the enactments relating to or amending that Section, as Parliament may determine, and any such Act may provide that the said amendments shall have effect for the purpose of assessment to Surtax for the year 1935–36 and subsequent years.

AMENDMENT AS TO ALLOWANCE FOR DEPRECIATION OF MILLS, FACTORIES, ETC.

Resolved,
That any Act of the present Session relating to finance may repeal the proviso to paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D and Section eighteen of the Finance Act, 1919 (which relate to the allowance to be made for Income Tax purposes in respect of mills, factories and other similar premises) and may enact such other provisions in lieu thereof as Parliament may determine.

AMENDMENT AS TO ALLOWANCE IN RESPECT OF EARNED INCOME OF WIVES.

Resolved,
That for the purposes of Sub-section (2) of Section eighteen of the Finance Act, 1920 (which provides for an increased personal allowance to a claimant whose total income


includes earned income of his wife), any income of the claimant's wife arising in respect of any pension, superannuation or other allowance, deferred pay, or compensation for loss of office, given in respect of his past services in any office or employment of profit, shall be deemed not to be earned income of his wife.

NATIONAL DEFENCE CONTRIBUTION.

Resolved,
That, in the case of any trade or business of any description (including agencies and, in the case of bodies corporate, the holding of investments or other property), there shall be charged, on the sum by which the profits arising in any period of account ending after the fifth day of April, nineteen hundred and thirty-seven, exceed such standard as Parliament may determine, a tax not exceeding one-third of the said sum.

AMENDMENT OF LAW.

Motion made, and Question proposed,
That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise), and to make further provision in connection with finance.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Captain Margesson.]

Resolutions to be reported To-morrow.

Committee also report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.

Orders of the Day — SPAIN (BRITISH SHIPPING).

Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]

6.58 p.m.

Mr. A. V. Alexander: I feel that it is not necessary to make any apology on behalf of the Opposition for raising again to-night the position which has arisen at Bilbao, and which was discussed at some length in the Debate on Wednesday of last week. There is no one, I think, who, having been present at Question Time in this House yesterday afternoon, could possibly have failed to note the extreme uneasiness of the Government in their attempt to defend the policy which they have adopted in regard to the position at Bilbao; nor is there any doubt at all, I think, that there is a very considerable volume of opinion left in this old land of

ours which is still concerned with the promotion and defence of liberty and of justice, and which regards the action of the Government in this matter as entirely foreign to the best British traditions.
I am convinced that, if a Labour Government had been m office, and had adopted a similar form of action in regard to a blockade of the ports of a Government more in tune with the political views of right hon. Gentlemen opposite, and if we had thereupon refused the effective protection of the British Navy for ships flying the British flag and attempting to get to those ports, every one of them would not only have demanded that the Labour Government in such circumstances should be asked to change their policy, but would have denounced them as enemies of their country, as cowards who would not defend their own kith and kin, as improvident statesmen who would not even have the sense to protect British commercial interests in the future, and would have demanded immediately the resignation of the Labour Government.
The more I see and hear of the foreign policy of this Government the more I am convinced that they are not really concerned first and pre-eminently for the British Commonwealth of Nations. They are concerned first and pre-eminently with what they regard as the policy of the defence of private profit. Over and over again in the course of the foreign policy of this Government I have observed an attitude which convinces me that when questions arise which affect the safety of the British Commonwealth, the passage of the sea routes of the Empire, the whole future position of the nations gathered together within that Empire—over and over again they adopt a policy which is prejudicial because they are afraid of even appearing to give any support to policies of the Left. It is on that that I base myself when say that they are much more concerned about the defence of private property than they are about the ultimate position of the British Commonwealth of Nations.
In this case there is perhaps no other explanation of their policy in relation to that loyal Catholic liberty-loving body of people living in the Basque country but that they are afraid of appearing to give any semblance of support to a Left policy and to the maintenance of liberty


and freedom as the Basque Government desire to see it maintained. The actual circumstances which have been revealed in the statements by the Government and other quarters are such that we ought as the Opposition to demand either that the Government's policy is changed or that they immediately resign. That is exactly what they would have said to us if we had been on that bench to-night in the same kind of circumstances. There have been in the past British Governments which have been forced by public opinion to resign because of conduct far less culpable than the conduct with which we are charging the Government to-night.
What is the position? If the Government adhere strictly to the policy which the Foreign Secretary has laid before the House, then they are to be held responsible for two facts. First, that British shipping is no longer able to traverse the high seas on its lawful occasions because of the failure of the Government to provide adequate naval protection. Second, that the Government acquiesce, by their acceptance of a blockade of the Basque ports, a blockade not only in respect of munitions but food, which is specifically excluded from the Non-Intervention Agreement, in allowing the starvation of women and children as well as men to continue. The Parliamentary Secretary to the Board of Trade may think that that is amusing. It is not. We shall he quite prepared in this Debate to produce evidence of the stress of these people in Bilbao if the hon. Member thinks it is something to smile at when we raise the question of starvation.

The Parliamentary Secretary to the Board of Trade (Dr. Burgin): The hon. Member would never do me an injustice. I am not in the least smiling at the plight of the people in the Basque country.

Hon. Members: Withdraw.

Sir Stafford Cripps: You cannot see, where you are sitting.

Mr. Alexander: There is nothing to withdraw. I am strictly entitled to say what I have said about the amusement of the Parliamentary Secretary. I am perfectly entitled to call attention to it. Four questions arise. First, what was the meaning of the Government's decision at their Cabinet meeting on 11th April? Second, is the blockade of Bilbao by the

Franco faction effective? Third, was the protection afforded to British shipping prior to nth April effective and has it been effective since? Fourth, what is the effect of the Government's action on international relationships? First, what was the reason for the Government's decision at the Cabinet meeting on 11th April? I observe that in the House of Commons yesterday the First Lord of the Admiralty said:
I understand that on 6th April the steamship 'Thorpehall' was stopped on the high seas in the vicinity of Bilbao by the Spanish cruiser 'Almirante Cervera' and informed that she would not be permitted to enter Bilbao. The 'Almirante Cervera' was accompanied by the Spanish armed trawler 'Galerna.' The steamship 'Thorpehall' summoned assistance and His Majesty's ships 'Blanche' and Brazen proceeded to her support. In accordance with the instructions which had been issued by the Admiralty, the Spanish warships were informed that His Majesty's Government could not permit any action against a British ship on the high seas. I understand that subsequently the steamship 'Thorpehall' arrived safely at Bilbao."— [OFFICIAL REPORT, 19th April, 1937; col. 1413, Vol. 322.]
So far so good. That was on 6th April. But then a change comes over the scene, for in the answer of the Foreign Secretary to the Leader of the Liberal Opposition it is stated:
The Military Governor of Irun, acting on instructions from General Franco, informed Sir Henry Chilton on the evening of 9th April that the entrance into Bilbao of four British ships known to be lying in Saint Jean de Luz would be resisted by insurgent warships."—[OFFICIAL REPORT, 19th April, 1937; col. 1410, Vol. 322].
The protest made by the Leader of the Liberal Opposition at once on that answer was well justified. It is nothing less than a Parliamentary outrage that the Government should have been in possession of that information and suppressed it from among the relevant information supplied to the House of Commons in the Debate on Wednesday last. Certainly it is completely incomprehensible to my hon. Friends here why such a suppression should have taken place. At any rate, the Note was regarded as of sufficient importance to warrant the summoning of a special Cabinet meeting for Sunday, 11th April. A decision was then arrived at which is contained in the answer of the Prime Minister to the question put to him on Monday, 12th April. The House will remember that on that occasion the Prime Minister said that the


Government could neither concede nor recognise belligerent rights, that they could not tolerate any interference with British shipping at sea, but that they were warning British ships that, in view of conditions at present prevailing in the neighbourhood of Bilbao, they should not for practical reasons, and I ask the House particularly to note the next few words:
and in view of risks against which it is at present impossible to protect them, go into that area so long as those conditions prevail."—[OFFICIAL REPORT, 12th April, 1937; col. 598, Vol. 322.]
That decision was made by the Cabinet, in spite of what the Foreign Secretary said yesterday, at their meeting on 11th April because of the message from General Franco. If that is not so, what is the difference between 6th April, which the First Lord boasted about yesterday, and 12th April?

Colonel Wedgwood: Franco's orders.

Mr. Alexander: Except Franco's orders. The Government have not gone a little bit of the way yet to explaining that away. Let the House be in no uncertainty as to what our view is on that particular point. The four ships in question are admitted all to have been food ships. The Government were well aware, because they were not merely parties, but I am sure the Foreign Secretary would say, constructors of the Non-Intervention Agreement, that they had excluded from non-intervention any action by the controlling authorities against the delivery of food, and yet as soon as Franco draws attention specifically to the fact in his Note that these food ships are at Saint Jean de Luz and that he will oppose their passage, the Government turn tail right away and instead of adopting the same position exactly as the Navy had been doing in practice on 6th April, they caved in. My right hon. Friend was right in saying last week that they hauled up the White Ensign then hauled it down again and hauled up the white flag.
It is true to say that to-day the British ships connected with the Spanish trade can place no reliance on the Government for protection, except those people who accept orders from the Government as to what their business should be. If the Government say, "If you proceed, in spite of these orders, in certain circumstances we will protect you," there is something

to be said for that. But if you take an important case of a food ship, the "Marie Llewellyn"—not a large ship but important from the food aspect—a ship which is not equipped with wireless, and yet is ordered by the "Blanche" first and afterwards requested in a Board of Trade message not to go to Bilbao, is it not perfectly clear that the Government are not providing adequate protection for the free passage of our ships?

Colonel Ropner: The right hon. Gentleman must know that every important ship must have wireless.

Mr. Alexander: I have already said that the ship was not necessarily large but that in regard to the food supply of Bilbao she was important. I have yet to learn as an ex-Minister connected with the Admiralty that the duty of the Admiralty was confined to the protection of big ships. I always understood that it meant the protection of ships of all kinds carrying the British flag.
I come now to the next question, as to whether there is or is not an effective blockade of Bilbao. The First Lord of the Admiralty yesterday, in reply to the hon. Member for Nuneaton (Lieut.-Commander Fletcher), is reported to have said:
The reports which have been received from the Vice-Admiral Commanding Battle Cruiser Squadron, in His Majesty's Ship 'Hood,' read together with the reports received from the other authorities concerned, have confirmed the view that the Spanish insurgent authorities have established an effective de facto blockade of Bilbao.—[OFFICIAL REPORT, 19th April, 1937; col. 1441, Vol. 322.]
So yesterday we got the view expressed by the First Lord of the Admiralty that there is an effective blockade of Bilbao. It does not seem from the evidence to-day that that is very clear. I have a cable addressed to my hon. Friend the Member for Derby (Mr. Noel-Baker) by an important correspondent from Bilbao who is known to the Foreign Secretary. I do not want to quote his name but I will inform the right hon. Gentleman about him afterwards. It was received at 4 o'clock to-day.
I personally accompanied the 'Seven Seas Spray' into harbour 8.30 this morning. She left France suddenly 10 o'clock last night. Captain was semaphored frantically from shore to stop but he turned blind eye. Voyage completely uneventful. Captain's 20-year-old Fifi slept like a top. Only incident was one British destroyer patrolling the


Basque coast about 10 miles to sea feebly attempted to enforce imaginary blockade, warning Captain Roberts that he proceeded at his own risk. Roberts answered 'I accept full responsibility.' Destroyer wished him good luck and sheered off. No insurgent ship was ever sighted. Bilbao's destroyers and armed trawlers went out to meet the 'Seven Seas Spray' which, since there are no mines in Bilbao territorial waters, was able to enter the harbour without a pilot. Large force fighting planes circled overhead. As boat slowly moved up river with captain and daughter on the bridge huge crowds cheered, waved handkerchiefs and shouted Vivas for the English sailors and for Liberty.
He goes on to say that he will never forget the experience. There is a demonstration that there is no effective blockade by Franco. The effective blockade, if it is effective at all with such sailors as Captain Roberts available, is that of the Government. It is perfectly plain from the evidence that, if British ships, with these food cargoes available, are left to take their normal lawful occasions, there is no effective blockade. The Foreign Secretary, and I think more especially the First Lord of the Admiralty, have from time to time referred to the sowing of mines. Originally, on 12th April the Prime Minister referred to the fact that mines had been sown on both sides. I think I have some information on that. I have another telegram here, also from an important correspondent, which I should like to quote. Although I cannot quote the name in the House, it is only right, if I use it, that the Foreign Secretary should have the information, and I will hand it to him.
For your information, coastal defences of Bilbao are as follows: Five batteries heavy artillery, mostly Vickers 6-inch, 1936, range 15 miles, beautifully placed; destroyers, submarines, and armed trawlers; bombing aircraft, and aerodrome near coast. It is quite impossible for Franco's few ships to come within 10 miles of territorial waters, and, in fact, they have never risked battle with the batteries. Neither port nor territorial waters Bilbao are mined. Have only been mined twice—September and January. Second batch swept up long ago. Even in week following January mine-laying four British ships entered and left Bilbao on passage swept for them. In fact neither within nor without Bilbao territorial waters has any commercial vessel been stopped by a mine. Only casualties Basque mine-sweepers in course duty. Nor has any commercial vessel bound for Bilbao been fired upon or molested even well outside territorial waters. Since January precautions against mine-laying redoubled. Searchlights installed either side harbour mouth, nightly patrol of three to six boats plus daily minesweeping by 16 trawlers, who naturally never Catch anything because nothing to catch.

These are all facts known to me and many others here. Blockade of Bilbao does not exist for any Power prepared to protect its shipping outside Spanish territorial waters, and Basque Government ask no more than that. They do insist, however, that dishonest and uniformed attempts to frighten ships away from Bilbao should be abandoned and that ships chartered and paid for by Basque should be allowed to enter and free commerce resumed. Everybody here knows that there is not slightest danger, and that blockade made of paper and exists only in hopes Salamanca imagination Whitehall.
Perhaps the imagination of Whitehall is not uninfluenced by the hopes of Salamanca.
Local press quite rightly describe it as British rather than Franco's blockade and, if continued, it will end in the fall of Bilbao, ranking as most powerful intervention civil war.
In these circumstances is it not plain to the House that we cannot accept, unless we have a great deal more information than we have yet got, the fact that there is an effective blockade by the insurgent authorities of the port of Bilbao. I think we are entitled to ask the First Lord for a little more information about the naval reports which have been received. We have heard from time to time from the Foreign Secretary about the free passage of ships. Last Friday he gave us an answer, which came through the British Consul but which was really a Bilbao Government statement, which showed that, since 1st April, 27 have entered and 32 cleared from Bilbao, and we have never had any contradiction of that since from any representative of the Board of Trade. I take it, therefore, that those facts are established. When the First Lord answered yesterday he spoke of reports received from the Vice-Admiral Commanding the Battle Squadron and other sources, What was the exact information he got? In view of the very great importance of this issue, I think the House is entitled to know. I think we are also entitled to know the date of the report. We are also entitled to know who were the other authorities concerned which the First Lord says support his view based upon the report of the Vice-Admiral Commanding the Battle Squadron. Our information, at any rate, is that not only is the entrance to Bilbao free from mines and constantly kept free, but that it is impossible now for the entrance to be mined because of that control from the shore


which I indicated in the last paragraph of the quotation that I read.
I also want to contrast the statement made yesterday in regard to this question of effective blockade with the statement of the Prime Minister on 12th April. I daresay it has escaped the memory of several of my hon. Friends that, in the course of supplementary questions to the Prime Minister, the Leader of the Opposition asked whether in fact the situation of which he spoke in his answer did not mean that there was a blockade of Bilbao, and the Prime Minister said, "No, I do not think there is a blockade." He had in his pocket a message from General Franco dated 5th April and received by the Government on the following day. The Foreign Secretary now says that, of course, the message received from Franco had nothing to do with the Government's decision. The Prime Minister said, on 12th April, that there was no blockade, although the Government were making a decision to set up a blockade in effect by telling the food ships at St. Jean de Luz not to proceed to Bilbao. We should like some explanation of the difference there. In the third place, was the protection afforded to British shipping prior to 12th April effective, and has it been effective since? It is not necessary to argue the first point because, if they had carried out the action that they took in respect of the "Thorpehall," our shipping would have been safe. The First Lord, quite rightly, took credit for that yesterday. They were doing the right thing. I pointed out last week that when the Spanish Government were stopping and dealing with shipping in the early part of this outbreak, the captain stopped a Spanish warship, boarded her and demanded an apology from the Government for having interfered in any way with a British ship. That is the proper thing to do, and it is a duty that the Navy ought to continue to carry out whenever shipping under the British flag is challenged on the high seas.
If that was being done regularly up to 6th April, I think we can take it for granted that within the policy laid down up to that time by the Government, ample protection was being afforded to British shipping. Can we say that adequate protection has been afforded since? Take the case of the "Marie Llewellyn." Will the First Lord be able

to tell the House to-night exactly what was the message conveyed to the captain of that ship? [An HON. MEMBER: "And what the captain said."] I am tempted to read the reports of what the captain said which appeared in the London "Evening News" on Saturday night, but I am sure the First Lord has already seen those breezy utterances, and I do not wish to take up time unnecessarily. But I think we are entitled to know what was the actual message given to the captain of the "Marie Llewellyn."
The First Lord will remember that my hon. Friend the Member for Derby yesterday put a Private Notice Question on the subject which was not replied to in the House because there was not time to obtain the information. I think it referred to the night of 15th April. The First Lord has had since yesterday morning to wireless the Fleet and get the answer to that question. I should be glad to know whether we can have information to-night concerning the message given by the destroyer "Brazen" to the captain. I feel strongly the conviction that something was said to keep that man from getting his cargo through to Bilbao, and we ought to know the exact position. It is bad enough when the head of the British Admiralty, instructed, of course, by his Government, consents without further protest to the promiscuous laying of mines all over the high seas to the detriment of British shipping. But when, in addition, we actually hold up our ships in the pursuit of their lawful occasions, it is high time that we asked the Government either to change their policy or to resign forthwith.
In the fourth place, I wish to deal with the effect of all this upon international relations. The Government defence on this point, as on many other points connected with Spain, has been that their actions are always actuated first by a desire to adhere to the letter and the spirit of the Non-Intervention Agreement and by a desire not in any way to widen the area of conflict and thereby endanger the maintenance of good international relation. I do not think I have seen the real position in that respect stated more plainly or, I think, more sympathetically than it was stated in a leader in the "Manchester Guardian" this morning. I am sure there is nobody in any part of the House who does not want to promote


good international relationships, but will lack of good faith promote good international relationships? The real trouble about this matter is that the Government cannot have been maintaining good faith under the Non-Intervention Agreement by deliberately interfering with British ships which were trying to deliver food to the Basque ports and were therefore doing something which is entirely legal under the Non-Intervention Agreement.
Why do they want to interfere, if they have the specific assurances which I have recapitulated to-night, that the passage to Bilbao is clear and that it is impossible, with the new defences under the control of the Basque Government, to mine the harbour so as to make it unapproachable? Why do they refuse, in effect, to give free passage to our ships except at the ships' own risk? Such is the message that is reported to have been received by the captain of the "Seven Seas Spray" which arrived there to-day. I feel that on the question of good relations with other Powers, the Government cannot claim that their attitude on this matter will help. What about the effect on Spain itself? All those who have any good will or are well-meaning, hope that the result of this conflict will be to set up Spain as a nation within the comity of nations. I cannot believe that the action of the Government will help to achieve that end. When one considers the loyalty to British traditions, the great support to British trade and the great services in wartime of the Basque population, I cannot think that the cause which we have all at heart is going to be helped if we destroy, as we have largely destroyed, all that good feeling of the Basque people, by leaving the inhabitants of Bilbao to starve.
What about the other dangers involved? It is suggested, of course, that if we protect our own ships in delivering that which it is legal for them to deliver, under the Non-Intervention Agreement we may upset—whom? The friends of Franco? Germany and Italy? Is that what is suggested? It seems to me that for the last two years we have been pursuing a policy with regard to the dictatorship countries which, instead of constructing a basis for better relations, is steadily making matters worse. We have allowed those countries over and over again to bluff us. Indeed we started

earlier with the failure of the late Foreign Secretary in relation to the Japanese position. The slaughter of Abyssinia, in spite of appeals to the League of Nations, was another evidence of the way in which this Government have helped to strengthen dictatorship countries like Italy and Germany.
In this matter I say advisedly, that if it is desired permanently to improve international relationships, good faith and principle must always come before expediency. Over and over again, the Government, as on this occasion and in relation to this matter, have placed expediency before principle and before the promotion of justice. You cannot have permanent peace without justice and you will not secure justice among nations by giving way in such cases as this. It may sound a little too humble for me to do so, but I beg of the Government in the interests, first of the people who are suffering in Bilbao and are in danger of starvation, and secondly in the interests of good relations between the nations in the future, to answer the case which we have put before them to-night and to revise their policy. If they will not do so, I suggest that there will be the danger in the future of a charge of lack of good faith and in view of the feeling on this matter, which is growing more and more intense, we shall be compelled not only to charge them with failing in their duty but to demand their immediate resignation.

7.39 p.m.

Mr. R. Acland: I rise to define the attitude of my party towards this problem. In this connection we have been subjected to a certain amount of criticism during the last 24 hours. Certain hon. Gentlemen have asked me: "What is the matter with the Liberal party and why do you keep on changing your attitude towards this problem?" I wish to make it abundantly clear that we have changed not our attitude towards the problem but our attitude towards the Government. That we have been compelled to change three times in eight days, in order to keep pace with the changes in the Government's attitude towards the trouble.
The problem divides itself into two parts, one relating to territorial waters and the other relating to the high seas. In regard to the territorial waters part


of the problem, we agree that the Government were right to warn British shipping and to give such information as they had. It is open to those in charge of British shipping to choose between the information given by the Government and information given from various sources, including the speech to which we have just listened. If I had to make my choice I know what it would be, but each must make his own choice and we have no objection to the Government having issued that warning and given such information as they had. At the beginning of the week we approached with an open mind this question of the advisability of British action within territorial waters. We are not yet satisfied that it would be illegal for His Majesty's ships to deal with rebels as they would, I think, deal with Chinese pirates within territorial limits.

Vice-Admiral Taylor: Will the hon. Gentleman allow me to put this point? It is a very important matter.

Mr. Acland: I hope the hon. and gallant Member will allow me to proceed. Though, as I say, we are not convinced on that as a matter of law, we are convinced that, as a matter of wisdom, in the particular circumstances of this case, it would have been most rash to have entered into territorial waters with minesweepers or ships of any kind. We recognise the difficulties, and we have supported the policy of non-intervention. We have sometimes thought that a stronger attitude on the part of the Government would have produced better results, but we agree that the Government have the right to claim some credit for the state of affairs as we now find them. We do not ask the Government to do anything which would be interpreted as interference, but we do not see how the protection of our shipping on the high seas—food ships, of course—can be interpreted by anyone as an act which would justify others in tearing up the Non-Intervention Agreement. I have one other observation to make on the territorial waters position. This is a new policy which the Government have pursued since Monday of last week in response to new conditions. The Government, from first to last, have given us no evidence of any alteration in the conditions in territorial waters in the last

few weeks. The changed conditions relate only to the high seas and the remainder of my remarks will be addressed to the problem of the high seas.
There are three kinds of protection it seems to me which the British Navy can give British merchantmen on the high seas. First there is the sort of protection which is no protection at all—to say in effect, "We cannot protect you and we make no effort on your behalf." The second is what I would call fortuitous protection. That kind of protection has been defined once or twice by Ministers. It means that if a British warship happens to be at the place where a Spanish warship happens to be molesting a British merchant ship, which has also happened to be there, then the British warship will interfere to prevent such molestation. The drawback to that policy is that the Government which is pursuing it in words can convert it into a policy of no protection, by the simple expedient of withdrawing British warships from those parts of the sea where danger is to be expected. They can do so, secretly, without any announcement and without anyone in this House knowing anything about it. The third type of protection is what I would call substantial protection, which means that not only do you say, "We will protect you if we happen to be there," but also, "We will take steps to secure that we shall be there when the need arises."
That policy of substantial protection, it seems to me, can be carried out in three ways. First, you can fill the seas so full with British warships that wherever trouble arises there will be a British warship there. That is impracticable. The second is to shadow the Spanish warships with British warships. That seems to me to be imperfect. The third way, and I know no other way, in which the policy of substantial protection can be carried out is to accompany British merchant ships with British warships up to the edge of the territorial limits; I do not mean to say side by side, but within sailing distance, nor do I mean that it is to be done in all circumstances and in spite of all difficulties. For example, if half a dozen British merchant ships were to approach from half a dozen different directions, the policy could not be carried out, but do not let us deal with difficulties until they


arise. Let us deal rather with the situation as it is.

Lieut.-Commander Agnew: What does the hon. Gentleman mean by "sailing distance"?

Mr. Acland: I mean at such a distance as to enable them to arrive on the scene, should any trouble arise, before that trouble has had time to develop into disaster. We can surely deal with the problem as it is, which is a question of one ship to-day, one yesterday, and perhaps one to-morrow, and it seems to me in all the circumstances that substantial protection means that British merchant ships are to be accompanied into the danger zone by British warships. I come next to the statements which have been made in the last eight days by various members of the Government. The first was made by the Prime Minister on Monday in last week, when he said, in answer to my right hon. Friend the Member for Caithness (Sir A. Sinclair):
They (His Majesty's Government) cannot recognise or concede belligerent rights, and they cannot tolerate any interference with British shipping at sea.
My right hon. Friend then asked whether the Prime Minister would assure the House that our ships would have orders to give full protection, not only on the high seas, but in territorial waters, and I am sorry to have to say I do not blame the Prime Minister altogether, if two Ministers subsequently prove to be at variance—that he entirely evaded that question in so far as it related to the high seas. He was then asked a more important question by the hon. Member for Seaham (Mr. Shinwell):
What would be the position of the Government if these British vessels were prepared to undertake the risks involved?"[OFFICIAL REPORT, 12th April, 1937; cols. 597–9, Vol. 322.]
The Prime Minister gave a reply which showed that he refused to contemplate that possibility as one which conceivably might arise, and it was not one which he seemed to consider worth discussing. Therefore, it seemed to us on Monday that the Government's position was that they would give fortuitous protection to British shipping in these waters and that they would convert that into no protection by the two steps of ordering British shipping not to go and by taking no steps in particular to assure that British warships would be available in the neighbourhood.

Nor were we satisfied with the statement of the Home Secretary in his very much interrupted speech on Wednesday, because my impression was that he referred us back to what seemed to us the unsatisfactory statement of the Prime Minister two days before. But a very different statement was made by the Foreign Secretary at the very end of the Debate on Wednesday, in answer to the right hon. Member for Caithness. He was asked:
Am I right in interpreting the answer which he was kind enough to give to one of my questions in this sense: that if the food ships which are now lying at St. Jean de Luz intimate to the senior naval officer of that station that they intend, in spite of the Board of Trade's instruction, to carry their cargoes into Bilbao, they be afforded the protection of His Majesty's ships right up to the territorial limits?"—[OFFICIAL REPORT, 14th April, 1937; col. 1144, Vol. 322.]
My recollection is that the Foreign Secretary conferred momentarily with the First Lord of the Admiralty before replying that he hoped they would not go, that they would pay attention to the warning, but that if, in spite of that advice, they did go, they would be afforded protection up to the three-mile limit.

The Secretary of State for the Home Department (Sir John Simon): I am in the recollection of the House and of the right hon. Gentleman opposite, but I said exactly the same thing, and expressly said it, earlier in the Debate.

Mr. Acland: There was an interruption by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who asked if the British Navy would take steps to protect any British ships that were attacked, and the Home Secretary replied:
yes, certainly. The right hon. Gentleman, I think, is well justified in making the point raised here. It is really covered by the statement that we cannot tolerate any interference with British shipping."—[OFFICIAL REPORT, 14th April, 1937; col. 1050, Vol. 322.]
That seemed to me at the time, and it seems to me now, to refer back to the statement of the Prime Minister, followed, as it seemed to us, by very unsatisfactory answers to supplementary questions, and, therefore, it seemed to us that the Home Secretary's statement was no advance on that of the Prime Minister. Coming back to the answer of the Foreign Secretary, that seemed to us to mean substantial protection to be given in the only way that


substantial protection can be given, namely, so far as is reasonably practicable by the accompaniment of merchant ships by British warships if they should ask for it. I want to know, when he said that British merchant ships would be given protection right up to the territorial limits, how that protection is to be given unless those ships are accompanied by British warships right up to the territorial limits. That statement seemed to us, interpreting it as we did in that way, as meaning in effect, convoy, and that statement satisfied us at the time. Any doubts that we may have had on the matter were cleared up on Friday, when—

Mr. Magnay: The hon. Member has just said that he was satisfied. What I want to know is, How did he vote?

Mr. Acland: We came here on Wednesday, on the strength of the statement of the Prime Minister, intending to vote against the Government. We listened, as is the duty of all Members, to the whole of the Debate, and at the end of it we found that we could not vote against the Government, but in view of the extraordinarily inept way in which the Government had handled the whole situation, surely we could not be expected to give them our warm support. If the statement made by the Foreign Secretary at the end of Wednesday's Debate had been made by the Prime Minister in answer to my right hon. Friend's question on Monday, no question would have arisen. There was one question which worried us. The only instructions which have been given to British shipping, either warships or merchant ships, so far as the House has been informed, were the instructions given on 9th and l0th April, namely, instructions to wait.
Clearly, then, the advantages of the statement of the Foreign Secretary at the end of the Debate on Wednesday could not be realised unless British naval officers were instructed that they were to protect even disobedient merchantmen, and unless the Consul at St. Jean de Luz had already instructed the merchantmen to wait, it was to instruct them that if they chose to take the risks, they would receive Government protection and convoy up to the limit of the territorial waters. Therefore, I asked a question on Friday, prompted by the information in my morning newspaper that a British ship had

left on Friday night, with no mention of any warship having gone with her, which made me wonder whether any instructions were given. I asked:
whether it has been or will be an instruction to commanders of British warships in the neighbourhood of Bilbao that so far as is reasonably practicable they are to accompany up to the limits of Spanish territorial waters any British merchant ships that may desire to proceed to Bilbao contrary to the advice of His Majesty's Government?
If it had not been in the mind of the Foreign Secretary that British merchant ships were to be given convoy, ought he not at that point to have informed the House that the interpretation which I was putting on his answer to the Leader of my party was a wrong one, and that no question of convoy arose? I submit that that would have been the proper behaviour on his part, but he did not do that. If there was any doubt as to whether his statement to the Leader of my party meant convoy, he cleared it up on Friday by saying that the point that I had in mind, namely, convoy, was covered by the answer which he had given on Wednesday to the right hon. Member for Caithness. He said himself that his answer to that right hon. Member was intended to cover convoy, because he said:
This, I think, covers the point which the hon. Member has in mind.
I said:
It does with one exception,
and he said:
Of course."—[OFFICIAL REPORT, 16th April 1937; cols. 1316–17, Vol. 322.]
Does it not come from the lips of the Foreign Secretary, therefore, that British commanders are to accompany up to the limits of the Spanish territorial waters any British merchant ship that may desire to proceed to Bilbao contrary to the advice of His Majesty's Government, and am I not entitled to contrast that with the statement of the First Lord of the Admiralty, in answer to the right hon. Member for Caithness, who asked:
Is one of these ships entitled to go to the senior naval officer on that station and ask for an escort up to the limits of territorial waters?
To this the First Lord replied:
No, Sir. We have never thought it right to give instructions that a ship which has been definitely discouraged from proceeding should receive a convoy. What we have undertaken to do is to protect any ship when it sends a


message or when it appears to need protection on the high seas."—[OFFICIAL REPORT, 19th April, 1937; col. 1409, Vol. 322.]
Is not that a complete contradiction? Is it denied that the answers of the Foreign Secretary meant that, of course, instructions had been sent to the commanders of British warships on the spot that they were to accompany? [An HON. MEMBER: "No."] There is doubt about that? I really do not think there can be. My question is whether it has been an instruction to British commanders on the spot in the neighbourhood of Bilbao that they are to accompany up to the limit of territorial waters? Now if that is not implied by the Foreign Secretary, if I was wrong in interpreting his answer in that way, why did he not correct it? He told me and the House then that the point of convoy was covered by his answer. On the general question dealt with in the last part of his question, namely, convoys, I would refer the right hon. Gentleman to the specific question put by the right hon. Gentleman the Member for Caithness (Sir A. Sinclair).

The First Lord of the Admiralty (Sir Samuel Hoare): The word "convoy" does not appear.

Mr. Acland: The word "convoy" does not appear? What do those words mean, that they are to accompany up to the limits of Spanish territorial waters? What does that mean but that this is an instruction to British commanders on the spot that they are to go with British merchant ships proceeding to Bilbao? The answer was "Of course, it has been an instruction to them." But we get a flat contradiction to that by the First Lord of the Admiralty, who says that it has never been the policy of the Government to provide convoys. On these two statements I submit that we have a complete contradiction between the two Ministers, on which the House is entitled to ask and receive an explanation. I am not going to ask the question which might arise as to the past, because, after all, the inconsistencies of Ministers, although interesting, do not really matter so much as the future.
As to the future, I suggest that the House is entitled to know the answers to one or two questions. Does the reply of the Foreign Secretary to the Leader of my party stand? Will we give protection to disobedient merchant ships right up to

the limits of territorial waters? If so, how can that protection be given unless British merchant ships are accompanied so far as practicable and possible right up to the limits of territorial waters? Will British warships take deliberate steps to put themselves in those positions where danger is expected, not for the purpose of turning British merchant ships back, but for the purpose of seeing British merchant ships safely through those parts of the high seas which would be dangerous if they were unaccompanied by British warships? Will British commanders be instructed that such is the policy they are to carry out? Having got the British merchant ship through the high seas, will the British warships impose no opposition other than friendly advice against the merchant ship proceeding into territorial waters, and will it be made known to British merchant ships that they are entitled to weigh up the evidence given by the insurgent Government as to the dangers, and the evidence given by the Basque Government as to the dangers, and if they decide to run the risks will it be made known to them that they may call upon His Majesty's ships, and that His Majesty's ships will use their full resources to see that they are given unmolested passage through all parts of the high seas no matter how thoroughly invested those parts may be by the warships of the insurgent or Spanish Government.

8.5 p.m.

Sir S. Hoare: I welcome the opportunity to intervene in this Debate. It is quite obvious that there are a great many wrong impressions in the minds of some hon. Members and the sooner they are removed the better. I imagine, however, that the House will not wish me to cover, anyhow, some of the very wide field covered by the right hon. Member for Hillsborough (Mr. Alexander). It did seem to me that a good deal of that was very effectively covered in the Debate last week. I am here to-night chiefly to deal with the specific questions he has been asking, and to explain to the House any new development, if there have been developments, since last week when we had the previous Debate. First of all, as First Lord of the Admiralty I should like to say a word from the point of view of the Navy.
At the very outset of my remarks let me make it quite clear in this matter that


neither the Navy nor the Admiralty has any individual policy. The Navy is the agent of the Government. The Navy carries out whatever is the policy of the Government, and it is altogether unjustifiable to suggest that the Navy may have a policy of their own as distinct from the policy of the Government. Secondly, I should make it quite clear, to start with, that the Navy is able and ready to carry out any policy that is enacted by the Government of the day. The Navy is strong enough to deal, and deal easily, with both the Spanish navies or either of the Spanish navies, and there is no question whatever that if it was the policy of the Government of the day to adopt a course which meant pushing our ships into the ports of Spain, whether they be the ports of the Government or the ports of the insurgents, from the military point of view that would be an operation which the Navy could very easily carry out. Thirdly, it should be made quite clear that throughout all these difficult months the Navy has adopted an absolutely impartial attitude to both sides in Spain. If I wanted evidence to convince any hon. Member who might doubt that statement—[An HON. MEMBER: "No one doubts it."] No one doubts it? [An HON. MEMBER: No."] I saw a right hon. Gentleman on the Front Bench opposite shaking his head.

Colonel Wedgwood: They have been very partial. I may as well state the case. At the end of August last year a signal came from a British ship going across from Gibraltar to Melilla, as I explained the other day, saying that they were being molested and prevented from going to Melilla by a Spanish battleship. Immediately the Navy, without waiting any orders from the Home Government, cleared for action and proceeded to rescue the British ship. That was the "Gibel Ferjon," and it must be within the recollection of the right hon. Gentleman. That ship did not cross once carrying petrol and cement from Ceuta to Melilla, it crossed regularly under the protection of the British ships. That was the right action, no doubt, for the British Navy to take up; but if it was right then it is right now that they should protect British ships going to Bilbao on exactly the same lines, and the fact that they are not doing so is

evidence, not of partiality on the part of the Fleet, but of partiality on the part of the Admiralty.

Sir S. Hoare: I can assure the right hon. Gentleman that he is misinformed. We are acting in the same way exactly in the case of Bilbao as last August in the case of Melilla. If any further evidence of impartiality is needed, I would point, first of all, to the 20,000 refugees. I can assure the right hon. Member that no distinction is drawn between refugees on either side, and I can assure him further that the action we took last August in the case when the ports of Morocco were being invested by the Government fleet was exactly the same as the action which we have been taking in recent years in the north-west of Spain.

Mr. Lloyd George: May I interrupt the right hon. Gentleman? Does that mean that if a British ship is now intercepted by an insurgent ship and wires to the British Fleet, that the British man-of-war will be there to protect them and order the insurgents off?

Sir S. Hoare: Yes, Sir. The right hon. Gentleman will, perhaps, allow me to develop at greater length and in greater detail the position to which he has drawn attention.

Mr. David Grenfell: Is it not recorded that after the fall of Malaga, after General Franco's troops had captured Malaga, a British warship took in food?

Sir S. Hoare: This has no connection with the question now of allowing British ships to take food to Bilbao. There, again, I assure hon. Members there has been no partiality. I make these observations and I ask hon. Members on all sides of the House to believe me when I say that the Navy is perfectly capable of carrying out any policy imposed upon it, and that it has been altogether impartial during these difficult months on the coast of Spain, and if there are any criticisms to be made, let them be made against the Government, and not against the Navy.

Mr. Lloyd George: Does that mean that the same protection will be given to a British ship going to Bilbao as was given in the case of Melilla to a British ship going to a rebel port with petrol?

Sir S. Hoare: Yes, Sir, certainly.

Colonel Wedgwood: Why has it not been done?

Sir S. Hoare: If hon. Members will allow me to deal in my own way with questions I will try to give the House very full details on all these points, but, as I said just now, it seems to me that a great deal of the difference in this House is due to misunderstanding. The House will want details on the three following questions: (1) What is our information as to the present position on the North Coast of Spain; (2) What are the sources of our information; (3) What is the actual position so far as our ships are concerned. Let me deal with each of those questions. I will begin with the sources of our information. The right hon. Member for Hillsborough asked me what they were. I will tell him. They are the British Ambassador, our Consular agents and the naval authorities on the spot. What does that information amount to? Here I must deal in some detail with the matter, and particularly with a question on which the right hon. Member for Hillsborough and the hon. Member for Barnstaple raised one or two important issues. The information that we have received has gone to show that off the coast of Spain a new situation had arisen. It may be that for the first time in the history of the incidents in Spain it had proved possible for one of the two combatants to isolate a particular part of the Spanish territory and, so it seemed to our informants, to invest it both by sea and by land. Nothing quite similar had previously happened in the history of the Spanish operations.

Colonel Wedgwood: Who are your informants?

Sir S. Hoare: Our informants are the British Ambassador, our Consular agents and the naval authorities.

Colonel Wedgwood: Oh!

Sir S. Hoare: The right hon. Gentleman roust not so constantly throw doubts on the good faith of our informants. I am trying to put before the House the full position and to do so in some detail. On 6th April one of our destroyers reported that a close blockade had been started which prevented supplies of any kind reaching the port of Bilbao. The Commander went on to say that in his view the blockade was effective. On the following day, 7th April, our Ambassador at Hendaye reported that Bilbao was

effectively blockaded. The right hon. Gentleman opposite in connection with these dates suggested that as the result of some threat from General Franco we subsequently sent instructions which went to the Consuls and the ships a day or two afterwards. I can assure him once again that that was not the case. Our instructions were sent as the result of the information that we had received from the sources at our disposal. I am not giving away a Cabinet secret when I say that our decision was reached on the facts of the situation as they appeared to us, and not as the result of a threat from General Franco.

Mr. Attlee: Will the right hon. Gentleman make plain where our Ambassador, who is not living in Spain, gets his information from?

Sir S. Hoare: As the right hon. Gentleman knows, there is only a bridge between him and Spain, and we have during all these months received a considerable volume of information from him. Let me continue the history of the matter. On 14th April we had a report from the Vice-Admiral. We then sent the "Hood." That did not look very much as though we were giving way to the threats of General Franco. The Vice-Admiral reported that there were insurgent warships on patrol outside Bilbao, but that owing to a very heavy storm then raging in the Bay the blockade seemed to have been somewhat relaxed, and there were fewer ships to be seen of any kind. On the following day one of the destroyers, the "Brazen," reported that the battleship "España" was in a position to intercept ships approaching or leaving Bilbao. A subsequent report, on the 16th, stated that the "España" and two armed merchant vessels were on patrol 17 miles to the northward of Cape Pescador, in a position to cover Bilbao. Further than that we had information, which I believe to be correct, that there had been this concentration of insurgent ships off the Basque coast, and that as a result there were off the Basque coast, and particularly in the neighbourhood of Bilbao, one Spanish battleship, one 8-inch cruiser, one destroyer and several armed merchantmen, whilst the Government forces were composed of only one destroyer, an armed trawler and a submarine. These facts are very important. They really go to the whole root of the matter.
Blockade—I am not using the word in the juridical sense—depends for its effectiveness upon ships being able to keep other ships from going into a port. The question of ships, in my view, is far more important in a blockade than any question, important as it may be, of mines. A fact that cannot be contradicted was that off the Basque coast, for the first time in the history of the Spanish operations, there were these forces of insurgent ships and there were practically no Government ships to resist them. It was chiefly because of this fact that the naval authorities and the diplomatic authorities took the view that the blockade was an effective blockade. The fact was that there on the spot were these insurgent ships, powerful as compared with the Government ships, and that there were practically no Government ships to resist them.
Now I come to the question of mines. The important factor of the blockade was the presence of these strong forces of insurgent ships as compared with Government ships. The mines question is an important one, but it is subsidiary to that.
Let me give the House the information at our disposal about mines. I say at once that our information about mines is in the very nature of things less precise than our information about the presence of insurgent ships. Obviously so. It is much easier to identify ships and mark their presence than it is to be sure of the exact disposition or exact danger of a particular minefield, but we have received quite a quantity of information about the laying of mines. They were first laid, as the right hon. Gentleman himself said, off Bilbao at the beginning of the year, and since then British warships have not entered ports which they believed to have been mined. In quite recent days we have received further information that mine-laying by General Franco is still going on. There is no doubt about it. Only yesterday I received a telegram saying that a number of mines had been swept up outside Santander.

Mr. Attlee: How many?

Sir S. Hoare: Fourteen. It is also a fact which cannot be denied that two or three of the minesweepers outside Bilbao were actually sunk by mines.

Mr. Attlee: When?

Sir S. Hoare: About six weeks ago. I have a further telegram which has come in during the Debate relating to the merchant ship "Olavus," which came out of Bilbao a few days ago. The Master has informed the owners that it just missed a mine. It came through the minefield and just missed a mine outside Bilbao.

Mr. Attlee: Then some ships have come out of the port successfully?

Sir S. Hoare: The right hon. Gentleman must remember that there were many cases in the War of minefields being very effectively laid yet, none the less, ships got through them.

Mr. Attlee: This is a point on which we have never got any information. The right hon. Gentleman has now told us that Bilbao has been avoided by British ships and, therefore, they could not know themselves that the mines were there. We have now this further information, but we have never been given the sources of the information about mines being laid outside Bilbao, which is denied by all the authorities on the spot.

Sir S. Hoare: This is a telegram from the master of the merchant ship "Olavus" which is dated the 19th April. She reached Rotterdam yesterday. The telegram is:
On arriving off Bilbao was shot at by a rebel cruiser. Shore batteries replied, one shot nearly hitting the ship. Cruised about all night with no lights. At daylight proceeded into harbour. Passed unknowingly through a mine area. Saw one mine and kept clear. On arrival heavy air raid, 43 aeroplanes taking part, three air raids in four days. On sailing from Bilbao rebel cruiser ordered us to alter course towards coast. We were 15 miles off escorted by rebel cruiser until 'Hood' arrived on the scene.'Hood' escorted us 30 miles out.
It shows that we are affording protection to our ships.

Mr. Attlee: That information has come since the statement was made in the House by the Prime Minister and the Foreign Secretary. Could we have the information on which they acted?

Sir S. Hoare: The right hon. Gentleman is really unduly suspicious. The right hon. Member for Hillsborough himself stated that minesweepers were at


work outside Bilbao. Surely, minesweepers would not be at work if there were no mines in the channels outside Bilbao.

Mr. Alexander: I am sure the right hon. Gentleman does not wish to misrepresent me. I said that they have been sweeping up since January, but I also said that there were no mines because they have been kept clear.

Sir S. Hoare: That is not the information at our disposal. We believe that the position is dangerous to merchant ships and on that account we gave them warning. The Board of Trade must necessarily advise merchant ships, and in view of the evidence at our disposal, the mass of evidence about the presence of insurgent warships off the coast, and, secondly, of the mines, we felt it essential that the warning should be given. When we had this evidence of the presence of insurgent ships and the existence of minefields we might have done one of three things. We might have insisted upon pushing British ships into the harbour of Bilbao. Militarily we could easily have done it, but we took the view quite definitely that action of that kind, whatever might have been its legal or military justification, would have endangered the whole Non-Intervention Agreement.
Secondly, we might have said nothing to merchant ships at all and left them to go on at their own risk, possibly to be destroyed by insurgent ships or one of the mines in the minefields, not knowing what the policy of His Majesty's Government was. We felt that that was not a course which we could honourably or safely take. We felt that it was much better to tell merchant ships the position and give them our advice that it was unsafe in the conditions to proceed to Bilbao. That is the course we have taken, and about that course there seems to be a great deal of misunderstanding. There is no issue between us as to whether or not we protect British shipping upon the high seas. Over and over again we have said that we do protect British ships on the high seas, and we protect them on the high seas whether they take our advice or whether they do not take it.

Mr. Noel-Baker: Are these ships, the "Espana" and others, which the right

hon. Gentleman tells us are carrying out the blockade, on the high seas, or are they in territorial waters?

Sir S. Hoare: I suppose that normally they are on the high seas.

Mr. Noel-Baker: If we protect British ships there, how can they conduct a blockade?

Sir S. Hoare: They can get into territorial waters. Moreover, my information does not bear out the information given to the House by the right hon. Gentleman the Member for Hillsborough that the fortifications and the guns at Bilbao are capable of keeping the insurgent ships outside territorial waters. That is not my information. My information definitely is that insurgent ships have been frequently within the three-mile limit, that they have not been fired at by the shore guns, and that they have themselves fired upon the shore fortifications. Let me return to what is really the key position. What is the position now, first of all on the high seas, and secondly, in territorial waters? As far as the high seas are concerned, we do definitely protect British shipping. We have so informed General Franco. We did not do that as a result of any threat, but, as was stated in the Debate the other day, we told him quite clearly that we will stand no interference with British shipping on the high seas.

Mr. Lloyd George: Recently?

Sir S. Hoare: Within the last two or three days. We told him that even as far as ships in territorial waters are concerned, he would be held answerable for any damage that might take place. Therefore, as to the high seas, I do not think there is any issue between us, except as to methods of protection. Let me say a word about that, for it has been made to appear that there is a difference of opinion between my right hon. Friend the Foreign Secretary and myself. There is no difference. The series of supplementary questions to which the hon. Member for Barnstaple referred did not show that there was any difference between us. Our position has always been clear, and it is that we will give the protection that we think is likely to be effective to ships on the high seas. If a ship is advised by us, on the ground of safety, not to proceed to a particular port, I should have thought it was common sense


not there and then to provide a convoy to enable it to do the very thing we had advised it not to do.
Apart from that consideration, are hon. and right hon. Gentlemen opposite wise in insisting upon that as the only form of protection to ships proceeding to one of these Spanish ports? Is it likely, if one takes a ship, surrounded by British warships, up to the three-mile limit and draws attention to the ship, that it is going to slip through territorial waters into one of these Spanish harbours? No, we have said that we will give protection that we think effective to ships on the high seas. We will continue to do that. We will not bind ourselves to any particular form of protection. The fact that that protection is effective is shown by cases such as that of the "Thorpehall" a week ago, and the case which I have just quoted of His Majesty's ship "Hood" coming to the assistance of the "Olavus" As far as I am aware, the shipowners understand the position, and they are not dissatisfied with it, and I claim that it is the only wise and reasonable course for us to adopt in these very difficult conditions.
I am as conscious as any hon. or right hon. Gentleman opposite of the fact that the situation is a very confused one, and that what may be true to-day of a particular port may not be true to-morrow. We shall follow the situation from day to day, and if we came to the view that the so-called blockade was not effective, we should be the first to accept the new state of affairs. On the other hand, if we came to the view that a particular port had become dangerous to British shipping, within territorial waters, equally it would be our duty to warn the shipowners. I should have thought that, in view of those considerations, the position was clear—protection for all British ships on the high seas and protection in the most effective way that the Admiralty can arrange—

Mr. Lloyd George: Whether you warn them or not?

Sir S. Hoare: Whether we warn them or not. Within territorial waters, owing to the reasons which the Home Secretary and the Foreign Secretary gave last week, we are not prepared to send British warships, not so mach on account

of the danger to British ships, great though that may be, but because we believe that to do so would endanger the Non-Intervention Agreement. I have given the House the information at my disposal, but there is one thing further that I would add. The right hon. Gentleman the Member for Hillsborough asked me what happened about the "Marie Llewellyn." He asked me specifically what action we had taken with the owner of the "Marie Llewellyn."

Mr. Alexander: The captain.

Sir S. Hoare: Both the owner and the captain. If the right hon. Gentleman had waited a minute or two, he would have seen that I am going to give the verbatim conversation that took place between us. I am afraid hon. Members will find it less picturesque than they might have expected from some of the reports in the newspapers of the language of the captain of the ship. The name of the destroyer was His Majesty's ship "Brazen." The conversation ran as follows:
BRAZEN: What ship?
Reply: Marie Llewellyn.
BRAZEN: Spanish ships are about. I advise you not to enter territorial waters.
(Merchant ship now commenced to circle to port.)
BRAZEN: Where are you going now?
Reply: Returning to St. Jean de Luz. What do you advise?
BRAZEN: What instructions have you?
Reply: None. At own risk. Owner's orders are to proceed to Gijon.
BRAZEN: I strongly advise you not to enter Spanish territorial waters.
Reply: Am returning to St. Jean de Luz. Thanks.
That is a very good and concrete instance of our attitude towards ships and of the very friendly relations that seem to exist between the captains of the merchant ships and the captains of the warships. The situation is fluid. I fully admit it. One of our difficulties in dealing with the whole of the Spanish problem is the fact that it does change so quickly from day to day. We will watch it and we will give advice to the merchant ships according to the facts at that particular time. Since the Debate last week I have read some very wise words about the Spanish position, and I will venture to end my remarks by quoting them:


Next Monday the Spanish Non-Intervention control scheme will actually be in operation. The business of negotiation has been long. Cynics and pessimists have prophesied over and over again that it would never succeed, that the whole proceedings are a farce, that there never would be agreement. They have not for the first time been proved wrong. Patience and perseverance have succeeded. It is a useful reminder that patience and perseverance are all important in the diplomacy of peace. Of course, some of those who have for months past been saying that non-intervention is a farce without control, and that control will never be achieved, will now change their tune and declare that the control that they used to insist was all important is entirely useless. These professional pessimists can be left to their professional pessimism.
What wise words, and they come from the "Daily Herald." Let me commend these observations to right hon. Gentlemen and hon. Gentlemen opposite. Let me emphasise the fact that we are at this moment beginning what we believe to be a new chapter in the non-intervention control, and that it is vitally important, in view of that fact, to throw no inflammable material into elements which are already sufficiently inflammable, and that both in the spirit and the letter we should maintain the policy of non-intervention.

9.50 p.m.

Mr. Lloyd George: I am not going to discuss the whole policy of non-intervention. That is much too wide an issue—whether it was desirable, whether it has succeeded, or whether it has failed. All I know is that at the present moment there are 100,000 foreign troops on one side, with a very remarkable equipment, and, from what I hear, about mom or 15,000 on the other side. If the right hon. Gentleman thinks that that is a proof of the success of the policy of non-intervention, it is a very remarkable conclusion. I am much more concerned to find out exactly where we stand. Although I think the right hon. Gentleman has carried the matter very much further than he did before—more in the direction of the reply given by the Foreign Secretary last week and, to a certain extent, by the Home Secretary—he has left it rather in doubt what his policy actually is. It is very important that British ships should know. There are, I understand, still two or three ships at St. Jean de Luz full of food for these starving people of Bilbao. If they leave St. Jean de Luz or Bilbao, informing the British Fleet that

they are leaving, will the British Fleet there take steps to protect them against being fired upon and destroyed by Franco's ships?

Sir S. Hoare: On the high seas, yes, certainly.

Mr. Lloyd George: It is so important that the Government should have in their own minds clearly what action they would take in a case of that kind, and it is equally important that British ships should know.

Sir S. Hoare: They do know.

Mr. Lloyd George: The right hon. Gentleman said that the Government had been perfectly impartial. I will give him two cases, not by way of arraigning the impartiality of the Government, but it is important to know what is to be done in the immediate future. Take the case of the Melilla incident. In August last the Spanish Government had complete command of the seas. They have lost it since. Morocco was then completely cut off and the Spanish Government could prevent munitions going there. Here is a British ship sailing for Morocco at a time when the Spanish Government had established, in the sense that Franco has established it now, a complete blockade of the Moroccan coast. They intercept that ship and order it to go to Malaga or elsewhere. The ship sends a message to Gibraltar. What happens? A torpedo boat destroyer, according to a report in the "Daily Telegraph" at that time, had been ordered to fire if there was interference.

Sir S. Hoare: That was on the high seas.

Mr. Lloyd George: That was the case then. There is a similar case now, but instead of protecting a British ship against the Government forces they are now called upon to protect British ships against similar action by Franco, but with this difference: the Government ship never threatened to fire, but simply ordered the other ship to go and to remain there until a reply came. In this case General Franco has definitely stated that he will sink British ships if they try to get through. Will the same procedure he adopted with regard to British ships defying Franco's fleet as was taken in that case when we sent the "Repulse"


and the "Codrington" to rescue this ship and to tell the captain he could go wherever he wished?

Sir S. Hoare: Yes. The answer is that we shall behave in exactly the same way. The "Hood" did so two or three days ago.

Mr. Lloyd George: The reason why there is a doubt left in our minds is rather due to the form of the speech of the right hon. Gentleman. He spent a good deal of time in demonstrating that there was an effective blockade. That left doubt, certainly in my mind, having some experience of blockades in the War. I know exactly what a blockade means, provided one is dealing with belligerents, but here we are not. Has the right hon. Gentleman established to his own satisfaction the doctrine of the blockade because he wants to say that, there being a blockade, we are not going to interfere to protect our ships? I understand from him now that he does not, that he will protect British ships whether there is a blockade or not.

Sir S. Hoare: Sir S. Hoare indicated assent.

Mr. Lloyd George: It is very important that we should know exactly what the position is and that British ships should know, because just see what happens. It is all very well for the right hon. Gentleman to say that there has been no partiality.

Sir S. Hoare: It is perfectly true, anyhow.

Mr. Lloyd George: Well, while I will not say that it is untrue as far as the right hon. Gentleman is concerned, I am sorry to say that upon the facts, it is not correct. In this case, what he himself read of the transaction between the captain of the "Marie Llewellyn" and the captain of the "Brazen" showed that he was ordered—[Interruption]—I beg pardon, advised, not to proceed.

Sir S. Hoare: Into territorial waters.

Vice-Admiral Taylor: He was advised.

Mr. Lloyd George: I used the word "advised" three times, but if it pleases the hon. and gallant Member I will say it a fourth time. No advice of that kind was given in the Melilla incident.

Sir S. Hoare: Yes, I think it was.

Mr. Lloyd George: No; on the contrary the moment the vessel sent its wire to Gibraltar a telegram came back to say that the "Codrington" and the "Repulse" were going there, and the only advice that was given to the ship was that she could now proceed wherever she liked. It is no use saying there has been impartiality. This has a great bearing upon the new non-intervention pact. Let the House note what we are doing. We are handing over the whole of the east coast of Spain to the Germans and to the Italians—a very vital part of Spain for the Spanish Government. Suppose the Germans and the Italians pursue the same course as we pursue with our Fleet on the north coast and warn off every British ship. They are entitled to see whether those ships are carrying munitions of war, but suppose they discover they are carrying only food to Valentia and to Barcelona, and the Germans say, "We advise you to clear out. We advise you to go back." They will know what that means, when the Germans and the Italians can equally advise Franco's scouts where to find them.
I do not say that the Germans or the Italians would sink our ships. They would leave that to the others. Would they offer any protection at all to our ships when they are proceeding on what we call their "lawful occasions" because they are carrying food, and food has been exempted by the acceptance of the Non-Intervention Agreement? If we call the attention of the Germans and the Italians to what they are doing, what will they say? They will say, "We are only doing exactly what you did on the north coast of Spain." What will happen if that is the case? The Germans and the Italians will be effectively blockading the east coast, and if we are going to carry out our "Marie Llewellyn" policy we shall be helping Franco to blockade the north coast. So far from that being a fair policy of non-intervention it will be practically strengthening Franco's blockade around the whole coast at a time when he has been smashed.
My right hon. Friend spoke of the international situation. Has it occurred to our Government what they are doing, and doing now? There is no doubt at all that at the present moment the Government in Spain are on top. I have had a good deal of information about that from people on the spot. They are on


top, and they feel perfectly confident that they are going to win. Why has Mussolini agreed not to send any more troops there? Why is he even prepared to discuss the question of withdrawing troops? Because he knows perfectly well that the game is up. The Germans know it. They know that they went into a bad partnership. They are sick of it. They want to clear out. A time will come—may I have the attention of the First Lord of the Admiralty and especially, at this moment, of the Foreign Secretary?
My right hon. Friend the Member for Epping (Mr. Churchill) made a great appeal for intervention to gather the parties together. I did not think very much of the actual suggestion he made at the time, but that has nothing to do with the general question of intervention with a view to putting an end to this terrible carnage. I hope it is a practical question. What influence would our Government have with the people that matter there if it was known that they had been helping to starve these hundreds and thousands of women and children in North Spain? The Basques will be a very important element in any settlement. They are a very moderate people. It is idle to refer to them as anarchists, or Communists, or Atheists; they are a very God-fearing people. Hon. Members who look at the "Daily Telegraph" to-day will see an account, a very remarkable account, from Bilbao. It says that the whole of the community, without any difference of religion or politics, are united in fighting against Franco's aggression. If you get the parties together, is it not important what Britain may say at that conference, and what Britain's influence will be at the conference? If I had a conference of that kind, and if I were dealing with it, I would rather have the Basque Government there. The Catalan Government is far more to the Left; the Valencia Government probably less; but the Basques take a view which is far from being an extreme one. Is it desirable for us, from the point of view of the future, to take any step that will eliminate those people? They were friends of ours during the War; we had no better friends. The people who are behind Franco were against us to a man then. They lent their ports to the Germans to sink our ships in the Mediterranean, yet the best His Majesty's Government can do is to warn

British ships not to take food to the children of the very people who fought for us. The Basques were with us. They sent their ships out and ran the risks; 30 of those ships were sunk. Yet the best thing the Government can do is to warn British ships not to give food to their starving children.
You have only to see what has been going on. Again I quote the "Daily Telegraph" of to-day. The captain of one of Franco's ships says how friendly they have been with the British Navy there. The report says:
He said that it had been a source of great pleasure to him to be able to work on friendly terms on questions arising from the blockade of Bilbao.
He is Captain Caveda, the commander of the Nationalist fleet, and described as a hero of the Philippine war. I never heard of him. He is now employing his heroism in the service of Spanish high treason. His statement shows where the information came from. He describes meetings between the Commander of British destroyers and himself.

Sir S. Hoare: We had just the same meetings with the Spanish Government.

Mr. Lloyd George: I beg the right hon. Gentleman's pardon. You had no visits between the ships at Gibraltar and Spanish men-of-war.

Sir S. Hoare: Yes.

Mr. Lloyd George: I beg your pardon; that is not so. [HON. MEMBERS: "Oh!"] That is where your information came from. I have just had a telegram from the President of the Basque Republic—

Mr. Eden: I did not want to interrupt the right hon. Gentleman upon something which is not a Foreign Office matter, but I must point out that I have had a telegram saying that the Spanish Prime Minister himself paid a visit to our Commander-in-Chief.

Mr. Lloyd George: I accept that at once. I should be very sorry to say anything which appeared to be a reflection upon the British Navy, and if anybody thinks that I have done so I most certainly withdraw, because it is really a very important matter, so far as the future is concerned. I do trust that the Government will bear in mind that the action which they took in the last few


months has given the impression that they have taken sides. The impression is left in the minds of the Spaniards, upon the minds of very important sections of opinion in France, and, there is no doubt at all, has been conveyed to large masses of opinion in this country. When there are hundreds of thousands of people starving, when you have left food out of your contraband regulations, when British ships you know are loaded with food, and nothing else, for the feeding of your friends the Basques, who are not liable to any of the suggestions about their having abolished God from their lives—they are the last people in the world to make that charge against—you have left the impression that you are helping Franco. If the right hon. Gentleman now declares that British ships are free to go with cargoes of food to Bilbao and that if they go, taking the risks, the whole strength of the British Navy will be there to help them, this Debate will have answered its purpose.

9.13 p.m.

Mr. Riley: I want to put one or two questions to the Government relating to the information upon which the Cabinet relied for taking the course they did of advising British ships not to proceed to Bilbao. I notice that when the First Lord of the Admiralty was addressing the House a few moments ago he said they had received ample confirmation from various sources to show that there was a real blockade by the insurgents at the port of Bilbao. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) has just indicated one of the sources of information upon which the Government have been relying. He called attention to the fact that in the "Daily Telegraph" to-day there is a sepcial article by a correspondent referring to a conversation which that correspondent says he had with the chief officer of the insurgent fleet outside Bilbao. There is one part of that interview to which the right hon. Gentleman the Member for Carnarvon Boroughs did not refer, and which I think affords the key to the position. He referred to the conversation as to the pleasure expressed by the chief officer of the insurgent fleet—a pirate fleet, one has to remember—at being on friendly terms with the British Navy in relation to the blockade at Bilbao, but he did not mention that the telegram points

out that the chief officer of the insurgent fleet said that the officer in command of British destroyers patrolling the Bay of Biscay had frequently visited him to discuss matters affecting British ships.
I am not suggesting that the officer in charge of British ships was not perfectly entitled to visit even the commander of the insurgent fleet, and it may be to obtain information; but when one realises the fact that collaboration of a kind has been taking place between the chief officers of our ships and the chief officers of the insurgent ships, one understands what may be the source of the information upon which the idea of a blockade has been accepted by the Foreign Office. I suggest, therefore, that from that point of view the information upon which the Government have been acting during the last week or two is of a not very reliable, and, indeed, somewhat suspicious character—that it is information coming from the insurgent side to make out a case of blockade because it suited their purpose to do so. From that point of view one has doubts about the strength of the ground upon which the Government have taken their course.
As an ordinary Member of the House, I have, I am sure in company with many other Members, found it difficult to reconcile the repeated affirmations by the Prime Minister that the Government will not tolerate any interference with British ships in connection with the situation, that they will not accord belligerent rights to either side, and that they will not recognise the right of blockade. These three affirmations have been made over and over again, and were repeated in the Debate last Wednesday, but how can plain people reconcile them with the information that His Majesty's ships in the Bay of Biscay are instructed to place obstacles in the way of the delivery of food by British ships, by discouraging the masters of British ships from fulfilling their lawful obligation of delivering goods to, as has been said, people who are starving, while at the same time we say that we will not tolerate any interference with our ships?
The attitude of the Government on this matter is not consonant with the past history of this House or of this country in such situations. There are circumstances in this situation which ought to induce the Government not to lay so


much stress on the question whether protecting and even convoying British ships on the high seas into the ports of Northern Spain would be construed as interference. There is a higher call. We know that there are many thousands of people whose lives depend upon their having this food; it is a humane task; and although I, for one, without any qualification, want to see the Government of Spain come out victorious in this struggle, at the same time I would also say, and I believe I speak for all my friends on this side, that if there were in the insurgent part of Spain people who were subject to starvation, we should wish them to be treated in exactly the same way. I appeal to the Government to place no further obstacles in the way, but to see that, anyhow in the case of Bilbao, the people who are starving shall have the right to receive food.

9.21 p.m.

Captain McEwen: I still fail to see the object of this Debate. The right hon. Gentleman the Member for Camarvon Boroughs (Mr. Lloyd George) appeared to derive great satisfaction from having elicited, not for the first, but more like the tenth, time from the Government Front Bench, the fact that British merchant steamers would receive the protection of the British fleet on the high seas. Why he should show so much satisfaction at having once more elicited that already very plainly stated fact, I do not know, but I still fail to see the point of view of the Opposition in raising this Debate, because, if I may say so with respect, if they imagine for a moment that there is in the country any body of public opinion behind their point of view in this matter, they are making a very grave error. Their case, as has been amply proved by these recapitulations to-night, is a very lame case indeed. The few new facts which the Debate has elicited from that side of the House have been used by them, as was said in another connection, as a drunken man uses lampposts—more for support than for illumination.
The case presented by the events at Bilbao is surely as clear as crystal. In the first place, General Franco has declared a siege by land and sea of that port. We, in accordance with our already long-declared policy, which was approved by this House, decided not to intervene,

and accordingly we told such ships as may be in the port of St. Jean de Luz and elsewhere that there is a blockade of Bilbao, and that it would be wiser if they did not attempt to run into that port. There is only one alternative policy that we could have adopted. That would have been to have said nothing to the masters of those vessels, but to allow them to risk, not only their own lives, but also the general peace of Europe, by attempting to run through the blockade to that port. Two reasons are put forward by the Opposition for advocating a policy different from the one which the Government have pursued. In the first place—and this is the reason which is sometimes put forward by the hon. Member for Derby (Mr. Noel-Baker)—they say that, if it were a question of munitions, they could understand that such ships would not be allowed to go in, but food is a different matter. Therein they refuse to realise that from the point of view of the besiegers the breaking of a blockade by food ships or imports of food into the garrison is just as damaging, if not more so, than the import of munitions. Secondly, it is alleged that we ought, on humanitarian grounds, to feed the starving women and children who, unfortunately, find themselves in Bilbao. I would be more impressed by this argument were I convinced that this love of humanity applied to the whole human species, but I fear it does nothing of the sort. If the women and children are good supporters of the Spanish Government, they arouse the humanitarian feelings of hon. Gentlemen opposite. But I understand that there were women and children, for example, in the Alcazar at Toledo.

Mr. Riley: I said that I should plead for the relief of starving women and children if they were on either side.

Captain McEwen: I know the hon. Gentleman said that. I am not referring to him, but to the Opposition parties as a whole. I do not recollect hearing that the cries for help of the women and children in the Alcazar aroused any response in the breast of the hon. Member for North Cumberland (Mr. W. Roberts), for example, and the response of hon. Members opposite was exemplified by the hon. Member for Rotherham (Mr. Dobbie), whose reply to any and all such


piteous appeals was a stream of machinegun bullets directed, I understand, by his own hand.

Mr. McGovern: Is the hon. Member aware that when the women and children were in the Alcazar the Government forces offered a guarantee of safety to them if the insurgents would release them, and that even a priest went in and made the offer on behalf of the Government, but that the insurgents held on to the women and children in order to save their own skins?

Captain McEwen: That is the hon. Gentleman's interpretation of the facts.

Mr. McGovern: It is a fact; you cannot refute it.

Mr. Maxton: It is common knowledge.

Captain McEwen: In view of these facts it is difficult to have any patience, let alone sympathy, with the appeal of the other side. It is high time that for our own convenience belligerent rights were now afforded to both sides. The Foreign Secretary last Wednesday set out the case with a wealth of detail. Why then do we not now accord them? The answer is to be found in a reply by the Foreign Secretary to a question by the hon. Member for South Kensington (Sir W. Davison) yesterday. He said:
We have embarked upon this policy of non-intervention in common with other countries. I certainly would not wish this country to take unilateral action."—[OFFICIAL REPORT, 19th April, 1937; col. 1403, Vol. 322.]
That, in other words means, we still have to get the approbation of the French Government. As M. Blum is apparently so amenable to reason in all things at the present time, he might also prove to be amenable to the case for according these rights if it were put in the same cogent way in which the Foreign Secretary put it on Wednesday, and I trust that it may be done.

9.30 p.m.

Mr. Bernays: The Opposition appear to think that they have a very good case against the Government on this issue. They appear at the same time to be extraordinarily embarrassed by that case. Both to-night and on Wednesday the right hon. Gentlemen speaking from that Box have been subjected to persistent interruption and it has been difficult on

this side, owing to these interruptions, to get a connected case put by the Government. They interrupt that case because they know how strong it is. Facts have been told the Opposition from that Box again and again. Again and again they have been challenged on facts. The Government speakers have given the facts. Hon. Gentlemen have said "That is very important; we are glad to have got that admission from the Government," and 10 minutes later they have put the same question to the Government. Facts seem to them of no importance. Take this question of the position of Bilbao. Do the Opposition or do they not accept the fact that there are mines in Bilbao or that there have been mines in Bilbao?

Mr. Noel-Baker: We have said repeatedly that we know there are mines. In September last there were mines and we allowed our ships to go there in numbers, a way being swept for them by the Basque sweepers. We want to know now, when there is an offensive against Bilbao, why the same policy is not pursued.

Mr. Bernays: I understand that the Opposition think that what the Government say about the existence of mines is untrue. They are accusing the Government of uttering cool and calculated lies, and that is one of the most serious charges that have ever been made from the opposite benches.

Mr. McGovern: Franco's lies repeated by them.

Mr. Bernays: To-day we saw the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) challenge again and again the facts stated by the First Lord of the Admiralty, and only at the fourth time of denial did he have the decency to withdraw. The Opposition are challenging the good faith of the Government.

Mr. MacNeill Weir: Mr. MacNeill Weir rose—

Mr. Bernays: I am not going to give way.

Mr. Speaker: Unless the hon. Member gives way, the hon. Member who wishes to interrupt must resume his seat.

Mr. Bernays: It is really about time a Government supporter was allowed to continue.

Mr. Weir: The hon. Member is making charges.

Mr. Bernays: I am not going to give way. To challenge the good faith of the Government and to give the impression that the Government are stating what is deliberately false is to challenge the whole foundations of Parliamentary government.

Mr. Weir: Did not the Prime Minister say that mines were laid by both sides? Answer that. [Interruption.]

Mr. Maxton: It is a Parliamentary courtesy to give way.

Mr. Bernays: I do not think that the hon. Member for Bridgeton (Mr. Maxton) was here at the beginning of the Debate and does not realise the kind of interruption to which Government speakers were subjected.

Mr. Maxton: I am not intervening on the merits of the Debate; I was merely saying that it is a good Parliamentary courtesy to give way, particularly from a junior Member to a senior Member.

Mr. Bernays: It is as a rule a very good Parliamentary custom, but this is the exception that proves the rule. This is the first time that I have ever refused to give way, and I think I am perfectly justified on this occasion.

Mr. Weir: You are making charges.

Mr. Bernays: The hon. Member will have an opportunity to answer those charges. If we got up every time charges were made, there would be no Debate possible at all. Whether there is or is not a blockade of Bilbao, there is a state of war there and Bilbao is a war zone. We shall be agreed on that. The safety of neutral shipping in Spanish territorial waters is imperilled and it is the duty of the Governments concerned to warn shipowners and sea captains of that peril. What adds to the difficulty, as I understand it, of neutral Governments in this connection is that there is a temptation on the part of sea captains to ignore that warning because there is great pecuniary advantage for ships that are willing to take the risk. I hear on good authority that owners have been offered as much as £10,000 to divert their ships on their homeward journey into Barcelona harbour.

I do not want to make that charge on mere hearsay evidence. I sent a telegram to-day to a shipowning friend of mine in the West of England and asked what were the increased freights that were being paid for ships going to Spanish ports. I received this reply:
While the ordinary time charter rate is in the neighbourhood of 8s., 15s. is the rate at which vessels have been chartered for six months for Spanish trading. This means that a 4,000 ton dead weight ship earns a gross freight in six months of £18,000, compared with £9,600 on the ordinary market time charter rate in normal trades, an excess profit of over £45 per day more than in other trades. One assumes this must be of considerable encouragement and material reward for those who are alleged to be applying their abilities and their tonnage in the direction of helping and assisting starving humanity.
I think we should bear those figures in mind. After all, it is salvation not at 5 but at 100 per cent. The best type of owner has, of course, resisted these offers, but the poor man is tempted by them and the skippers too—men like "Potato" Jones. I do not want to say anything derogatory—

Mr. Lewis Jones: Please do not. He is a constituent of mine.

Mr. Bernays: In many respects he is a grand figure, in the real Conrad tradition, but let us get "Potato" Jones in the right prospective. He is no philanthropist, no decent humanitarian, no internationalist interested in the niceties of international law. He is a sailor of fortune. He knows that, if he can get his ship into Bilbao, there is good money for him. I am told that he stands to make as much as £2,000 if he is successful. I say, and we all say, good luck to "Potato" Jones; but, really, why should he have a convoy? Why should the British Navy be exposed to unjustifiable risk in order that "Potato" Jones may reap rich profits? We were told that we on this side take this line because we are in favour of the defence of property. What sort of property are hon. Members opposite defending? Extortionate profits in many cases have been made because there are risks. These sailors of fortune cannot have it both ways. They cannot expect to get these great profits for taking risks and then have the British Navy come along and remove those risks. I wonder whether the Opposition realise what an escort for these ships would involve. It might be


two or three destroyers, perhaps more, concentrated at Bilbao. If Bilbao, why not Barcelona, supposing there was a state of war there? If the Navy is going to force a passage for ships in the North, why not in the South? At that rate half the British Navy would be concentrated in Spanish waters. Can any one doubt that, apart from other considerations, this could and would easily be represented as a breach of the Non-Intervention Agreement. The Opposition is avowedly advocating the escort of British ships because it would help the Basque Government. The hon. Member for Bridgeton (Mr. Maxton) said as much on Wednesday. The splendid speech of the right hon. Gentleman the Member for Epping (Mr. Churchill) in which he held the scales equally as between the rebels and the Government forces and made a moving plea for an appeal by the Powers to end these fratricidal offers produced not a scintilla of support from the other side.
The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) says we are not impartial on this side. What degree of impartiality do they themselves display? They want Franco to be beaten. They are advocating the course that they are advocating because it would assist their end, the defeat and collapse of the rebel forces. Yet, in spite of the cheers that greet that statement, the Opposition accuse us of being pro-Franco and being partial. There are a few Members on this side who are in favour of Franco—I wish it were not so—but they are a very small minority. There is not the slightest doubt, as far as the Opposition is concerned, from the watery pink of trade unionism to the full blood red of the Clydeside, they are all to a man for the Spanish Government. I am at a loss to understand their argument; why, because the Government is the legal Government, it is therefore the Government that must be supported. [Interruption.] Would the hon. Member say the same thing about the Nazis? If there was a rebellion against the Nazis would he be in favour—[HON. MEMBERS: "Legal Government."] The Nazis are far more representative of German democracy than the Spanish Government of Spanish democracy. General Franco is only a provisional revolutionist. We have never

really had an answer to this question: Would the Opposition apply the same test to the Nazis as they are applying in the case of Spain? [Interruption.] Of course they would not, and hon. Members have the honesty to say so, but I should like to hear some one on the Front Bench say so.
We are asked what effect action by us in Bilbao would have in Spain. Personally, I think to convoy ships into Bilbao would have exactly the reverse effect to that which hon. Members opposite think it would have. I believe it would play straight into the hands of Franco. At the moment he is losing the support of the foreign troops. There is some justification for the hope that the tighter non-intervention regulations which came into force yesterday will induce Mussolini to withdraw his volunteers and persuade him to extricate himself from a position from which he has got nothing but discredit. The Nazis have never had their hearts in the Spanish war. They have never been much more than observers. The German general staff has always been opposed to active intervention in Spain and Franco may well find himself deserted by the allies upon whom he has staked the chance of victory. But the situation would change in a night if Great Britain could be regarded as actively intervening on one side in Spain.
It was suggested by the right hon. Gentleman who opened the Debate that our action could have no effect on Mussolini. But if it resulted in the defeat, or the threatened defeat, of Franco's troops, Mussolini would have not merely to retain his volunteers but to reinforce them. He could adopt no other course if he wanted to retain a shred of prestige. I ask hon. Gentlemen opposite to consider this point. What would be our position if Signor Mussolini were able to interpret our action in Bilbao as a definite breach of the Mediterranean Pact and regarded himself as free to send an army corps to Spain? What other answer could we give to the troopships coming down the Mediterranean but to send them to the bottom of the sea with all the incalculable consequences that would follow? We have had the war of Jenkin's ear. We on this side of the House do not want the war of Jones's potatoes, and I believe the great majority of the country are behind us in that view. Such a war would be Germany's supreme chance. Her obvious


strategy is to embroil ourselves and France and Italy in Spain and then to have a free hand in the East.
I ask the Opposition to consider this, not just as a knock-about Debate against the National Government. Greater issues than that are involved. I will concede to the Opposition any doctrinaire points of international law which they may advance. It may be that there is a legal case for the action which they are urging upon the Government. We do not oppose them on legal technicalities but on the realities of the world situation. It is not only in Spain that horrors are being perpetrated. In Germany, in Italy, in Abyssinia, in Russia, and I daresay, if you took the lid off, in Turkey and in Poland, you could find the same story of cruelty and oppression, and it is not an exaggeration to say that France and Great Britain to-day form a pillar of fidelity to sanity and reason and decency, in a reeling world. The Maginot line is not merely the frontier of France and ourselves; it is rapidly becoming the frontier of civilisation. But what are the Opposition asking us to do? It is nothing less than that we should emerge from this zone of safety and sanity and plunge ourselves on one side of these two dreadful forces of Communism and Fascism which are rattling the world back to barbarism. Have the Opposition turned their backs to the peace propaganda on which they built up their party in the post-war years?

Colonel Wedgwood: You were one of them.

Mr. Bernays: I was never a member of the Labour party.

Colonel Wedgwood: You were a Liberal.

Mr. Bernays: And I have remained a Liberal, which is more than the right hon. and gallant Gentleman has done. In the name of peace, quite honestly and sincerely, the Opposition are trying to turn the League into an anti-Fascist international War Office. Even if the issue of Bilbao could be localised and it was only a question of risking two or three mine-sweepers and perhaps a destroyer, are the Opposition prepared to take those risks? Have they considered their own position in this matter? There is a new tone about their speeches nowadays. They talk about the prestige of the Navy

and the might and power of the British Empire. Phrases have been used by the Opposition in these Debates that might have come straight from a Palmerstonian Parliament. We have heard about Drake's drum and the Nelson touch and about how Britannia rules the waves, and one almost expected some hon. Member to rise on the Labour benches and say:
We don't want to fight, but by Jingo if we do
We've got the ships, we've got the men and we've got the money too.
Yes, the ships that the Opposition have refused to provide, the men in the recruiting of whom they have refused to assist, and the money they have refused to vote. Then there is the argument very popular with hon. Members below the Gangway opposite—the argument of the starving women and children. It is a dreadful story and it must fill every humane man with horror. Starvation, anywhere must have that effect. But I ask them what about the women and children of the men on the mine-sweepers and the destroyers who are alive to-day but who, if the course of action advocated by the Opposition is taken, may be dead to-morrow. What about Mrs. Smith, wife of able-seaman Smith on one of these mine-sweepers or destroyers who in a few days may be the widow Smith? The most dreadful responsibility that any hon. Member may be called upon to shoulder in this House is to go into the Lobby and vote that men shall die. It is a responsibility that we may have to take one day. At least let it be upon an issue which all can understand and from which there is no escape. Such an issue is not provided by Spain and any Government which tried to make Spain such an issue, would be driven from power within a week by an infuriated electorate.

9.54 p.m.

Mr. Dobbie: I would not have intervened had it not been for the statements of the hon. Member opposite including some references to myself and his comparison of the position in the Alcazar and Toledo with the position in Bilbao. There is no comparison at all between the two cases. It is true as the hon. Member says, that I was in Toledo just before it fell but the position of the women in Toledo and at the Alcazar was different altogether from the position of the women in Bilbao. I am sorry that the hon. Member is no longer in his place because I


wanted to point out to him that the women who were in the Alcazar were captured from Toledo in a raid by the people who were defending the Alcazar. Opportunities were given to the defenders of the Alcazar, representations were made to them when I was in Toledo from the Commandant of Toledo, offers were made by the Church, and a free passage was offered to the women and children in the Alcazar if those who were defending it would agree to allow them to come out, but the defenders of the Alcazar used the women every time they were attacked as a smoke-screen to defend themselves. That is why the Alcazar stood so long and why they had it when Toledo fell. There can be no comparison at all between the women and children and the people in Bilbao, who are starving, and the women who were in the Alcazar.
I am sure the hon. Member opposite did not intend to misrepresent the position or to make any unfair accusation against me, and I do not want to deny any part that I have taken. I am glad to be able to say here that right from the beginning I have been on the side of the Government in Spain and I have hoped the Government would win. I would have remained in Spain had there been a need for men, but what were needed by the Government at that time and what are probably needed now are ammunition and material to defend themselves and to carry on the struggle for liberty. The want of material effectively to carry on the struggle at that time is largely the responsibility of the Government of this country, and if the Government of Spain get defeated—I do not believe they will—the Government of this country may well be held responsible for the assassination of yet another democracy in Europe. The hon. Member opposite said that I had stated that I took part in the directing of machine guns. I want to say that I did not. I was with the machine-gun crew for three days, and there was no necessity for me to do that, because there was a lack of ammunition there, and the men were only able to fire so many rounds a day and all the rest of the time had to stand beside or behind their guns, unable to use them because of the lack of ammunition, for which this Government must stand responsible.
I am sorry that the hon. Member has not been here to listen to what I have had

to say in response to his statement, but let there be no mistake in the mind of any Member in this House. There is no comparison between the Alcazar and Bilbao. In Toledo, as I have said, the Commandant offered a free passage to the women, and the representatives of the Church were ready to accompany the women out, but on no occasion did those who were in charge or in command of the Alcazar give any opportunity for the women there to be released, and I want this House to understand that the statement of the hon. Gentleman opposite is absolutely untrue and has no reference at all to the position either at Bilbao or at the Alcazar.

10.0 p.m.

Sir Adrian Baillie: There have been many remarkable speeches this evening in this Debate, and I think that one of the most remarkable was that made by the right hon. Member for the Hillsborough Division (Mr. Alexander). If I had not known who he was, I certainly could not by his remarks have guessed that he was a leader of Labour or Socialist thought. I have never heard such an orgy of emotional jingoism. In the course of the various speeches which have been made from the Opposition side I have not yet heard one argument that would lead me to change my mind as regards the correctness or rectitude of the Government's policy of Non-Intervention in the dispute in Spain. There has been a considerable amount of information presented to the House from all sides. In the opening speech of the right hon. Member for Hillsborough a considerable amount of telegraphic communication was read out, and further information purporting to come from the man on the spot, and that seemed to show that not only was there a blockade of Bilbao, but that that blockade was not being made by Franco but was in effect being organised from Whitehall. The hon. Member for Barnstaple (Mr. Acland), who followed him, said that he knew which source of information he would choose, and that it would be the source presented by the Opposition side of the House. Having listened to this Debate and to the reply of my right hon. Friend the First Lord of the Admiralty, I am quite satisfied to take the information which comes from his sources.
I feel that while this Debate has centred particularly round the recent


events in connection with the blockade of Bilbao, there is still a broad matter of principle to consider, and that is that the British Government should take every possible precaution in no way whatsoever to put themselves in the position of being accused at any later stage of having taken any action, great or small, which might tip the balance on one side or the other in the Spanish Civil War. It is no part of the British Government's duty to interfere in the internal affairs of foreign countries, and I am glad to know that they are determined not to intervene in this internecine strife in Spain. I am not in the least biased as between the political persuasions of one side or the other in the Spanish conflict. I feel very much like the right hon. Member for Epping (Mr. Churchill), and I can see no very great difference between Nazi-ism, Fascism, Communism, or even Socialism. [An HON. MEMBER: "You may learn."]—That is the one thing that I trust I shall never have to do, because such a regime would be the death, at the end of the day, of our democratic institutions and of our individual liberties. In effect, however, some hon. Members have admitted that they are biased on one side or the other. Some hon. Members no doubt consider that of the Red forces are to emerge victorious, it may be a disaster of international importance, that it may be a matter even of sinister significance for this country, and that it may bring the influence of Moscow so much further west that it might bring Communism knocking at our doors. That is merely an assumption, and I see no reason to believe in the likelihood of any such thing.
On the other hand, hon. Members support in some cases the side of General Franco. In the past there was perhaps some reason for believing that General Franco would emerge successful, and in that case it might have been considered a s well to get in the General's good graces, so that when the time came we should be able to help him to unfetter himself on the one leg from the shackles of Nazi-ism and on the other from the shackles of Fascism. But again I say that all those are merely matters of assumption. Those are only opinions based on assumptions, which in their turn, perhaps, are based on the wish being father to the thought. Now I would like to say that from every point

of view I think the Government have been successful in handling their policy of non-intervention in Spain, and I believe that even taking a view primarily of ultimate self-interest, that this sticking to the policy of non-intervention will reap the greatest reward.
I was reading yesterday the words of an eminent commentator on current events, and in that regard he said that a cold enlightened selfishness could in reality be the most potent influence for peace, just as it was, that generous emotionalism had made many of the foulest wars in the past. This situation in Bilbao has, I think, been very exhaustively covered, not only by means of question and answer in this House, but in the Debate this evening and last Wednesday, and I must say for myself that I am quite satisfied not only with the action of the Government, but with their explanation of the attitude which they have taken from time to time, and it would seem therefore that the particular reason the Opposition chose on the Adjournment to raise this question again, was to put a specific question which was put in the Debate last Wednesday by my right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) when he said, "Have the Government to be run by the Admiralty instead of the Government running the Admiralty? The Navy are our servants and should not impose their prejudices on the British Government." As an ex-soldier and ex-civil servant, if I had been in the Navy I must say that I should have resented that insinuation, and having ceased to be a civil servant or a diplomat, I say that insinuation amounts to a calumny, and a calumny which, throughout this Debate this afternoon, has not been supported by one iota of fact and, in any case, where in the world does the right hon. Gentleman think lies the motive for what he calls the Navy, our servants, to be influenced by prejudice? We have heard a lot about prejudice this afternoon, but surely the word "prejudice" comes very ill from those hon. Members forming the Opposition. We know very well on what side in this civil war their heart lies, and I suggest I know one reason, not merely the old association with the interests in Moscow, but it amounts to this, that there is a relentless determination on the part,


of hon. and right hon. Members to pursue their doctrinaire feud against Fascism even without regard to the best interests of their own country.
There is, too, one more point, and if my hon. Friend will excuse me, I should like to refer to one more point which he made. He said, "So long as England is feeble, so long as we show the white feather and explain repeatedly that we shall always yield." So long as we remain feeble! What was the attitude of the Opposition when the Government recently took the proper steps and the proper means to remedy this feebleness? What was their attitude then? We know it, unremitting opposition and unremitting obstruction. Surely the attitude shown in those Debates and this sudden volte face shown on this Debate, reveals a state not only of political unbalance but I would suggest of political opportunism which has really little precedent. This is the first occasion on which I have had the privilege of addressing the House since my recent election for the Tonbridge Division of Kent, and I would like if I might to tell the Government that the two main issues upon which the election was fought were the matter of rearmament and the question of non-intervention in Spain. As a political newcomer to that division, by way possibly of enticing me there I was told that the electors of the Tonbridge division were the most intelligent electors of the most intelligent division of the most intelligent county of Kent. They did me the honour to send me back with such an important majority that I should be the last to criticise or diminish their reputation, and I would merely hope that the representative opinion expressed in that election will show not only the Government but the country and the world at large that the real support of the country is behind the Government both in their policy of non-intervention in Spain and in their determination adequately to reinforce the defence forces of this country.

10.12 p.m.

Mr. Grenfell: The hon. Member who has just spoken declared to the House that he is satisfied with the results of the policy of non-intervention, and I wonder what would discourage him. The hon. Gentleman is, strictly speaking, in favour of abolishing the policy of non-intervention. His Majesty's Government may be

reconstructing their policy to which they declared their adhesion, and which they have avowed openly, of intervening and preventing even our own people from rendering legal services to the people of Spain. It is on that account that we have taken this occasion to enable the House again to consider this very delicate and dangerous position. Since July last the House and the country have been very much disturbed indeed about the type of non-intervention in regard to the so-called civil war in Spain which has now gone on wearily with very great loss of life, disastrous consequences, and great confusion, internal and external. We have from time to time endeavoured to convince the Government from this side of the House that the demand for non-intervention has not been fully recognised and supported even by the Government themselves. Now many have alluded to the responsibility of the Government for the present situation. I do not think that anyone on this side wishes to bring an allegation against the Navy. The Navy is a loyal service, and although naval officers, like other men, have their political views, they do their duty. I do not think the Navy is in this matter acting without some kind of understanding with the Admiralty and the Government, which they serve. Therefore, our complaint should be directed against the Government, who are responsible. No individual Member of the Government should carry the whole of the responsibility. The Government as a whole are responsible.
It is beside the point to bring direct responsibility against any one Minister, although I must confess that we have substantial grounds for complaint against every spokesman on the Government side. They have been lacking in frankness. They have not taken the House into their confidence. The Opposition as well as the Government have a certain responsibility for the policy adopted by this country and they have a right to be accorded proper information. The Government have information available and the Government spokesmen are to blame for not imparting the information. We have reached a situation now in which we cannot trust what has been said from the Government side. I make that allegation knowing that a Minister is to reply. I say frankly that I have not been


satisfied with a single utterance on behalf of the Government in the last four or five days. It would be wrong to say that the people of this country are entirely on the side of the Government in this matter.
Something has been said about certain signalling communications which passed between one of the vessels of the Navy and some of our fellow-citizens who are engaged in mercantile business between this country and Spain. Some kind of flag-wagging took place and the message "Good-luck" came from the Navy to a merchant ship which was trying to run the blockade and, I understand, did so successfully. I feel sure that the country would give the same signal. The people of the country are dismayed by the conduct of the Government in the last week or so. They are perturbed. The overwhelming majority of the people appreciate the courage and enterprise of the men who wish to complete their voyages to Spanish ports. The Government ought not to ignore the enterprise of these British seamen, but it seemed to me that the First Lord, by insinuation or innuendo cast a reflection upon "Potato" Jones.

Sir S. Hoare: I never mentioned him.

Mr. Grenfell: The right hon. Gentleman referred to communications that had passed between the Navy and the "Marie Llewellyn" Who can speak on the "Marie Llewellyn" but Skipper Jones? The two captains were in signal communication and the right hon. Gentleman gave to the House the responses in each case, and it seemed that he did so with regard to Skipper Jones in a tone almost of contempt.

Sir S. Hoare: No.

Mr. Grenfell: If not, the right hon. Gentleman was very unfortunate in his manner. That was the impression that was made upon me. The country is getting a bit tired about things. They are disturbed by the events in Spain and puzzled by the happenings in this House. They are inclined to say, in words which we know well:
Confound their politics,
Frustrate their knavish tricks.
The people of the country want straight dealing. They understand what Skipper Jones wants to do and what other merchant seamen would like to do. They

do not understand what we are trying to do in this House, and least of all do they understand what the Government are trying to do. Everyone is more or less ashamed of the scuttle in the Bay of Biscay; this enforced detention at St. Jean de Luz of ships which have other duties to perform. St. Jean de Luz may be all right, but not a single one of these ships wanted to go there. They were bound for Bilbao, Gijon and Santander, and were not doing anything which would infringe the non-intervention agreement. They were not doing anything illegal; they were carrying on their proper and lawful trade and were under their charters and contracts bound to discharge their obligations. They have been sent to St. Jean de Luz and have had to stay there. There has been a virtual embargo against their complying with the conditions of their charters and the obligations entered into by their owners.
This trade with Bilbao is an old trade. The steel trade in South Wales has been largely built on the trade in iron ore with Bilbao which has been brought to South Wales for decades, coal going from South Wales to Bilbao. It has given employment to South Wales miners and to Basque workers. There has grown up a sort of relationship between these two bodies of workers; an amicable relationship. It is from South Wales now that many of these vessels have gone. They have brought iron ore to South Wales for the steel industry, and at the moment South Wales is very short indeed of steel. These vessels have taken on return cargoes, and there is no reason why they should have been stopped. The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said something which should not be forgotten. The Basque Government has always been a good friend to us in days of peace and in days of war. They have been engaged in this useful trade and in recent weeks no fewer than 27 vessels entered the Port of Bilbao and 32 vessels cleared for ports in this country. You cannot stop this trade without inflicting enormous damage on shipowners and seamen and others engaged in the trade. Our shipping has been laid up and there has been great hardsihp amongst our unemployed. Now that there is this opportunity to trade why should not our people be allowed to carry on their legitimate trade with Bilbao?
There is another side. The Foreign Secretary, the First Lord and, I think, the Home Secretary have insisted on the value of the humanitarian services performed by the British Fleet. We do not deny that there have been occasions when the British Navy has been able to play its part in bringing away refugees and in taking in food. Cannot this also be done as a humanitarian action? In the city of Bilbao there are 300,000 inhabitants. The "Daily Telegraph" today, not a Labour paper, but a respectable Tory journal, described in moving, eloquent and pathetic terms the sufferings of the civilian population, men, women and children. Those people are suffering from a lack of food, and food which is held up at St. Jean de Luz by the instructions of the British Government has been denied entry to the port of Bilbao. We have been told that because the blockade has been made effective, vessels are to be advised not to discharge their cargoes at Bilbao.
The blockade is an attempt to starve the population of the Basque country, a country bounded by the sea on one side and by high mountains on the other. With General Franco's troops on the land side, and with the sea, which is more or less difficult to navigate, on the other, General Franco hopes completely to cut off that country, and because he claims to have established a successful blockade we are told that we shall not allow our vessels to go to those ports, even when proof is forthcoming every day that the channels are free and that no harm or injury has befallen a single ship that has gone there. The Basque country has a coastline of from 200 to 250 miles. Considering the distance, how can the armed vessels of the rebels in Spain pretend that they can maintain an effective blockade? They cannot do it, and everybody knows that well. A far larger number of vessels than they have would be needed to maintain the blockade.
I think the Prime Minister was wrongly informed when he gave the impression that both sides had laid mines. Why should the Basque people do so? The rebels have done so, and I have the approximate dates on which they did it—at the end of September last and in January, when the Basque Government had not suitable searchlights to prevent the work being done by night. Some 125

or 130 mines were laid off Bilbao, Santander and Gijon during the third week of January, but they were swept away, and now there are no mines there. Proof of that is that vessels have left more than one of those ports without pilots and have come out uninjured. The rebels tried to blockade Bilbao by mines and armed vessels, but they were not successful, and they have got the British Navy to do the job for them. They conveyed information to the naval officers and to the British Ambassador at Hendaye, across the frontier, in France. Anybody can go and tell a tale to him; he does not know what takes place at Bilbao, at Santander, or even at Madrid; he has to be told by somebody who is interested enough to go and tell him the story. He was told this story, which has now been proved to be untrue. The Government have been misled.
This morning the "Seven Seas Spray" went into the port, with two women on board, without the slightest indication of danger. Those people who delivered their cargo of food are to be praised. I think the House and the people of this country should be proud of the gallantry of the persons on that ship. [An HON. MEMBER: "It has a Welsh captain."] There are four or five Welsh captains off the coast of Bilbao. They had been unemployed for a very long time, and they were legally chartered for these voyages. They are honest men who want to earn their living, and they have courage enough to complete the charter which they undertook in a legitimate way. It is the Government who are trying to make this blockade effective. The British Navy orders ships not to go, for that is what the right hon. Gentleman told us in terms to-night. If his version of the flag conversation was right, then it was tantamount to giving instructions. That conversation implied, "You must not enter territorial waters."
No vessel leaves a port in this country to circle round the high seas for ever. Every vessel leaves a port in this country to enter a port in another country. They were denied permission to enter the ports of the Basque country. They were told they must not enter territorial waters, and that was a prohibition to enter either of the three ports for which they were destined. They were told, "You can sail the high seas and we will give you protection, but


do not go near to Spain; it is dangerous." What a ridiculous explanation! It is a shameful explanation because it is not seamanlike or in accordance with the traditions of the Navy. These people have been told that they are not to go into Spanish ports and the captain of the "Marie Llewellyn" would not have gone away had he not understood that the message sent to him was an order not to go to a Spanish port, because he was told to keep away from territorial waters. No assistance was offered to this man and no information given to him. The First Lord gave us the exchange of messages, but we would have liked to listen in to the actual words of the conversation. When "Potato" Jones made his responses, I am sure that he was much more eloquent than the words we have heard to-night. These ships were entitled to protection.
The question has been put by a number of speakers, and I put it now—will the Navy give full protection to a British ship chartered and bound for Bilbao, Santander, and Gijon? Will the British Navy give protection and free access through territorial waters which will enable these vessels to go into either of these ports? If it does, there is no dispute between the two sides of the House. If it does not, if the British Navy says to these people, "You are not to enter territorial waters," it means that they are not to enter these three ports and that the Government are making themselves responsible for the effective blockade of the Basque country. We are now beginning a new set of controls. We are to control not only a portion of the Basque coast and the coast of France, but our naval forces are also to control portions of coast in the South of Spain. If it is the intention of the Government to maintain a blockade or to acknowledge a blockade and prevent British ships taking the risk of carrying food to the Basque country, will they do the same in the southern part of Spain which is now held by General Franco?

Sir S. Hoare: We shall do exactly the same in the same circumstances.

Mr. Grenfell: Do we know there is not a blockade in the South? The Foreign Secretary says there is no blockade there. He tells us these things. We accept the unsupported statement of the friends of

General Franco, who say there is a blockade in the North. The naval forces of the Spanish Government occasionally pay visits even to the South, and if the Spanish Government carry out a blockade in the South, will it be right for a British vessel to carry food to those parts? The Government's action is not so impartial as it is made to appear, and we shall be very watchful in the House to see that this new system of control is not exploited once again in the interests of General Franco to help him to win. I feel sure that that would not be in accordance with the wishes of a great many people in this country. The country has accepted the idea of non-intervention. It did not favour it in the beginning, but a larger number of people are now prepared to see it fully tried out. The action of the Government at Bilbao, however, is not nonintervention. It is really intervention on their part. It is a fraud upon the confidence of the people of this country and of the House if this action is now to be made to appear to be consistent with our policy of non-intervention. It will be so regarded by the world.
I have a letter here by M. Vandervelde, a leading politician of Belgium, published in to-day's "Manchester Guardian." It refers to the opinion of Belgium, but it is connected with nonintervention, and I feel sure this action by our Government will be regarded by the world as a crime against the Basque people, if the Basque people are brought to surrender weeks and months from now by the privations of their people, with the food ships standing there, food ships for which money has been paid. Those ships are under charter to deliver the food in Spanish waters. If the Basques are compelled to surrender the responsibility will fall upon the Government and upon this House, and we on this side wish to repudiate responsibility by a protest in this House.
It will do infinite damage to the prestige of this country. There are serious breaches of contract involved. The Basque Government have bought and paid for foodstuffs to the value of no less than £7,000,000 to save the town and province from starvation, and the ships already stopped by reason of our Government's warning account for only a fraction of the large number which are to bring the food. There are a large


number of other ships to be chartered before the whole of that food can be brought to Bilbao. It is an urgent matter to get food there and General Franco is counting upon that fact. There are probably sympathisers of Franco in this House who believe that the Basques will surrender, but we all know how people will suffer before they surrender, and their privations may go to greater lengths than those which were endured during the siege of Paris and other large cities in the past. There may be terrible suffering, to the disgrace of the whole world, and we shall be held largely responsible for it.
I ask the Government what effect they think this will have upon our own people here. Is this the way to get unanimity at home? Do the Government think I can join as whole-heartedly with them when they do a thing of this kind? I believe this is a crime. In the Budget to-day the Government have done one of the biggest things which I have seen done in this House. They have taken the long view. It was not a Budget for this year but for some years ahead. Was that Budget contemplated without regard to the prospects of agreement among the various sections of our people? Certainly not. It was put forward with the idea that there would be some measure of agreement for a large and sustained national effort. The optimum conditions of success cannot be preserved if there is no confidence in the Government, and I say frankly that the Government are not doing anything to win the confidence of this side of the House by what they are doing to-day. If the suspicion falls on the Government that they favour politicians of the Right at the expense of justice, that they dislike politicians of the Left, the effects of that may carry a long way. There are parts of the Empire which favour the Left rather than the Right. New Zealand, for example, has a Socialist Government. Are we going to do anything to prejudice their success because they hold rather more to the views of the Left? Are we taking up that attitude towards Spain. I am afraid we are.
I would give a final word of warning so far as any words of mine can have any influence on the Government. The Government must try to place themselves above suspicion. We cannot afford to

undertake this intervention to the prejudice of the people of the Basque country. They are kindly, religious people, and cannot be described in the terms frequently used in this House regarding a section of the Spanish people. They are the most religious people in Spain, and the action of the Government is to be regarded solely as an attack upon them on political grounds. I assume that the Government wish to maintain public confidence at home. We wish them, and everybody who is responsible for the Government in this country, whether it is a Government which we oppose or a Government that we share, to maintain the prestige of our country at the highest possible level. We have a contribution to make to world peace and civilisation. We shall lose an opportunity and disclaim our interest in world civilisation if we stand by and see innocent women and children being starved into submission because political prejudices prevent us from doing the right thing.

10.41 p.m.

The Secretary of State for Foreign Affairs (Mr. Eden): The hon. Gentleman has spoken with obvious sincerity and feeling in what he said; indeed, he always does. I was a little sorry to hear him say that he thought that we were actuated in the policy which we are now pursuing by some antipathy to the character of the Basque Government. I am sure that the hon. Gentleman is sincere in that conviction. I do not know whether he will accept my assurance, but I can assure him that it is not so at all. I confess that if I had to choose in Spain, I believe that the Basque Government would more closely represent our form of government than either the Catalan Government or the Franco Government.

Mr. Grenfell: I did not impute sole responsibility to the right hon. Gentleman, or to any other individual. I think the Government have been misled by the information which they were given. That information has had the effect of assisting one section at the expense of the other section.

Mr. Eden: That is a matter of another kind. If we have been misled, or if my information is faulty, that is a matter which we can discuss. I was anxious to clear away the hon. Member's suggestion that our policy is in some way actuated by


hostility to the Basque Government. That is the last thing that could be alleged against us. There is no reason whatsoever for any action of that kind on our part.
Listening to the discussion, it seemed to some extent repetitive of what was said last week. A certain new emphasis emerged here and there. I do not regret this discussion, because, in these extremely difficult matters, the more they are debated the more the policy which we are seeking to pursue will be realised, and either approved or disproved by the House as a whole.
Three main points have emerged from the discussion, and I must deal with all three of them. The first was that which was brought specially to a point by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), the question of the protection on the high seas. I did think that all that had been made clear by the Home Secretary when he first answered the right hon. Gentleman's question, in the course of a rather interrupted speech. I thought it had also been made clear by myself at the conclusion of that Debate. It still represents the policy of the Government. The hon. Member for Barnstaple (Mr. Acland) raised certain matters in connection with some answers I gave in the House on Friday—supplementary answers. I am willing to make a confession. If the answers which I gave to the original question or the supplementary gave the hon. Gentleman the impression that I thought we should have to employ convoys for ships, that was not my intention. I apologise if I misled the hon. Gentleman. We do not want to do that. What I said was that my statement of the previous Wednesday still stood. What I said then was:
If, in spite of that advice, those ships do go, then they will be afforded protection up to the three-mile limit."—[OFFICIAL REPORT, 14th April, 1937; col. 1144, Vol. 322.]
The question is what kind of protection? I was not qualified, at 20 minutes' notice on Friday, to say what kind of protection, because I am not First Lord of the Admiralty. The kind of protection is a matter which must be left to the Admiralty. The Government take the responsibility of saying to the Admiralty that these ships must be protected up to the three-mile limit. That is the responsi-

bility of the Government. The Admiralty's responsibility is to see that that protection is given. That is the real position as it is to-day.

Mr. Alexander: We cannot understand the inconsistency between that statement and the statement of the Prime Minister on 12th April in which he said that in the present circumstances we could not afford these ships protection, and that was why they were being warned not to go. Now we are being told, by the First Lord especially, that we can give adequate protection. What is the meaning of it all?

Mr. Eden: I think the position is clear; we must distinguish between the high seas and territorial waters. I am coming to that question in a moment. I can give the House the assurance that, as I said on Wednesday, and as has been repeated by my right hon. Friend in answer to the right hon. Gentleman's questions to-night, that is the policy of the Government.
The next question which arises from that is whether anybody suggests—so far as I know, no one actually has suggested—that it would be, or could be, the duty of the Government to escort these ships right into territorial waters to the ports to which they want to get.

Mr. S. O. Davies: Why not, if they are food ships?

Mr. Eden: There is the question of the impossibility of employing warships inside other people's territorial waters. As I understand it, the case which requires to be met is that we should undertake protection up to the three-mile limit, and that within that three-mile limit there is the risk of which we have spoken; but that, if ships want to take that risk, they are entitled to do so. We have given the advice which we thought it right to give, but if ships determine to go in spite of that advice they get protection up to the three-mile limit. After that, they would depend presumably for their protection upon the defences of the Spanish Government or the Basque Government as the case may be.
I come now to the real kernel of the criticism, which is whether the Government were justified in their apprehensions of danger within territorial waters, and whether they were justified in the warning which they gave. I want to say a word on the subject of mines. I


know that many hon. Gentlemen opposite feel strongly that our attitude in this matter has been prejudiced because they think that we want to favour General Franco. I want to tell the House that some weeks ago I received at the Foreign Office a communication from the Admiralty with respect to certain relief work that was being done by our destroyers on the coast of Spain. A few weeks ago, long before there was any question of General Franco wishing to stop people going in, I received this communication from the Admiralty saying that, in view of local conditions with respect to mines, they did not want their destroyers to continue to do this work, because they did not think it safe, and they asked me whether I could undertake to try to make arrangements for the exchanges to take place either overland or, if it could be arranged, by local shipping. I mention that to show the House that, whatever else there could be in that suggestion, there was no prejudice in it. The Admiralty did not want that work to cease; they only asked someone else to do it, because, rightly or wrongly, their information was that there were risks which they did not feel justified in running. After all, whether they overestimated or under-estimated the risk must be a matter of opinion, but that they thought there was a risk is clear enough from the fact of their having approached the Foreign Office in that way at that time.
Have those mines, whatever they may have been two or three weeks ago, been cleared away? I find it more difficult than some hon. Gentlemen opposite to dogmatise on that subject. The right hon. Member for Hillsborough (Mr. Alexander) was quite emphatic that there was not a mine at all. I am afraid that I cannot dogmatise in that way. I do not know whether the House fully realised the significance of the message which the First Lord of the Admiralty read out. It may be argued that we based our warning on insufficient evidence, but the experience of this ship does show that our apprehensions had some foundation. May I read to the House again what happened—this ship which has now arrived, I think at Rotterdam, having come out from Bilbao.

On arriving at Bilbao shot at by rebel cruisers.
That seems to indicate that our apprehensions of what might happen in territorial waters were not unfounded.
Shore forts replied, one shot from fort nearly hitting ship.
That is not a frightfully comfortable position to be in.
Cruised about all night with no lights. Daylight proceeded into harbour. Passed unknowingly through mined area. Saw one mine, but kept clear.
The Opposition would have blamed us if we had given no warning and if this ship had not kept clear, but had bumped into the mines. The House must distinguish between the Government responsibility in showing what they believe to be the position. The Opposition would have been the first to hold us responsible, and rightly so, if we had not given any warning.
On arrival heavy air raid, 43 planes taking part. Three air raids in four days. On sailing from Bilbao rebel cruiser ordered us to alter course towards coast. We were 15 miles off. Escorted us until Battleship 'Hood' arrived on scene. Rebel cruiser then left us and 'Hood' escorted us 30 miles out.
That is evidence of some importance of what the situation is. I do not want to set the experience of one ship against another. Because there is a risk of mines that does not mean that a ship cannot get through. Perhaps the great majority of ships may. The experience of that ship is not at all incompatible with the less disagreeable experience of another. Clearly the Basque Government had apprehended some danger from mines or they would not be sweeping mines every day with the activity which was described in the telegram which was read out to us from the Basque Government.
The right hon. Member for Carnarvon Boroughs described the conditions in Bilbao. I hope that he will not think that the people on this side have not sympathy and are not capable of feeling sympathy with the people in Bilbao at this time. When he says that it is our fault I think that he carries his argument a little too far. It is not we who are making the approaches to Bilbao dangerous. I do not think that it is any fairer to say that we are to blame for this than to say we were to blame in the American Civil War, when we did not attempt to save the South from being


hard pressed. In my view we have a responsibility both to our own ships and to the nation in what we do, and we will not shirk that responsibility, but, with respect, I do not think that it is a fair argument to seek to lay the whole blame on us for what may be happening in Bilbao at the present time. The warning that we issued, whether justified or not—we think it was—we gave in all good faith on the information that we had. It is not the law of the Medes and Persians. It is not unalterable. The situation has to be examined according to the circumstances, and the information that we have shows how much it changes. The hon. Gentleman who wound up for the Opposition did not quite appreciate what is the present position about the other ports on the Basque coast. He spoke as if the position from our point of view was exactly the same as at Santander and Gijon as it is at Bilbao. That is not so. The position changes from day to day. The representative of the Board of Trade made the position extremely clear at Question Time to-day. This is the considered statement of the Government's position. He said:
Present advices state that the Government's present information does not enable them to advise entering Bilbao and that as regards other ports, such as Santander and Gijon, there is a degree of risk which may vary from day to day, but in any case British naval vessels will, if called upon, give protection on the high seas as already announced.
That is a simple statement of the position. There is no warning attached to the other ports as there is in Bilbao. In any case British naval vessels will, if called upon, give protection on the high seas. The position is not the same in respect of Santander and Gijon as it is in respect of Bilbao. To show again the difficulty of the situation, I had a telegram only to-night from the Consul at Santander about the situation there. He reported that mine-sweeping operations are carried out, with the result that a certain number of mines have been swept up. I do not lay enormous emphasis on that. I quote it simply to show the House that this is an extremely difficult situation with which we have to deal and

one on which I do not think it is possible to dogmatise, as some Members have thought to do. I think the right hon. Gentleman, no doubt unwittingly, was rather unfair about the relations of our ships. They are, as a matter of fact, excellent on both sides. I have plenty of evidence from the Government side as to the relations of our ships on that part of the coast.

I should like to deal with the case to which the right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) referred of the ship which was stopped last August. This was a British ship bound for Melilla captured by a Spanish Government warship on the high seas and taken off in the direction of Malaga. She wirelessed for help and a British warship went to her assistance and rescued her. She was not escorted into Melilla and voluntarily went on to Gibraltar. She was, therefore, protected on the high seas and not in territorial waters, just in the same way that protection would now be afforded off the Bilbao coast in similar circumstances.

Mr. Lloyd George: And the same protection will be given now?

Mr. Eden: The same protection exactly will be given now in similar circumstances. I have tried to show that our action is not deserving of some of the charges which have been brought against us in this Debate. I do not regret the fact that my right hon. Friend and I have had an opportunity of making the position clear once more, and I conclude by saying that this is not a final, rigid rule that we have adopted. We must be permitted to review the situation from time to time in the light of the information which reaches us daily, and in the light of our responsibilities, and we shall do our best in the discharge of that duty not to favour one side or the other but to maintain impartiality.

Question put, "That this House do now adjourn."

The House divided: Ayes, 119; Noes, 49.

Division No. 147.]
AYES.
[11.0 p.m.


Acland-Troyte, Lt.-Col. G. J.
Baillie, Sir A. W. M.
Bossom, A. G.


Adams, S. V. T. (Leeds, W.)
Baldwin, Rt. Hon. Stanley
Boulton, W. W.


Agnew, Lieut.-Comdr. P. G.
Barclay-Harvey, Sir C. M.
Bracken, B.


Allen, Lt.-Col. Sir W. J. (Armagh)
Beamish, Rear-Admiral T. P. H.
Brown, Col. D. C. (Hexham)


Amery, Rt. Hon. L. C. M. S.
Beaumont, Hon. R. E. B. (Portsm'h)
Burgin, Dr. E. L.


Anstruther-Gray, W. J.
Bernays, R. H.
Cartland, J. R. H.




Gary, R. A.
Hanbury, Sir C.
Petherick, M.


Cazalet, Thelma (Islington, E.)
Hannah, I. C.
Pickthorn, K. W. M.


Cazalet, Capt. V. A. (Chippenham)
Hannon, Sir P. J. H.
Pilkington, R.


Churchill, Rt. Hon. Winston S.
Hepburn, P. G. T. Buchan-
Radford, E. A.


Clarke, Lt.-Col. R. S. (E. Grinstead)
Hepworth, J.
Ramsay, Captain A. H. M.


Colville, Lt.-Col. Rt. Hon. D. J.
Hoare, Rt. Hon. Sir S.
Rayner, Major R. H.


Courthope, Col. Sir G. L.
Holdsworth, H.
Reed, A. C. (Exeter)


Cranborne, Viscount
Hopkinson, A.
Remer, J. R.


Croft, Brig.-Gen. Sir H. Page
Horsbrugh, Florence
Rickards, G. W. (Skipton)


Crooke, J. S.
Hudson, Capt. A. U. M. (Hack., N.)
Russell, A. West (Tynemouth)


Crookshank, Capt. H. F. C.
Hulbert, N. J.
Sanderson, Sir F. B


Crowder, J. F. E.
Hunter, T.
Sassoon, Rt. Hon. Sir P.


Davies, Major Sir G. F. (Yeovil)
Jones, L. (Swansea W.)
Simon, Rt. Hon. Sir J. A.


Dorman-Smith, Major R. H.
Kerr, J. Graham (Scottish Univs.)
Smiles, Lieut.-Colonel Sir W. D.


Duckworth, W. R. (Moss Side)
Latham, Sir P.
Smith, Bracewell (Dulwich)


Dugdale, Major T. L.
Llewellin, Lieut.-Col. J. J.
Somervell, Sir D. B. (Crewe)


Duncan, J. A. L.
Locker-Lampson, Comdr. O. S.
Southby, Commander A. R. J.


Eden, Rt. Hon. A.
Loftus, P. C.
Spens, W. P.


Elliot, Rt. Hon. W. E,
Lyons, A. M.
Strauss, H. G. (Norwich)


Elliston, Capt. G. S.
Mabane, W. (Huddersfield)
Stuart, Hon. J. (Moray and Nairn)


Emery, J. F
MacDonald, Rt. Hon. M. (Ross)
Taylor, Vice-Adm. E. A. (Padd., S.)


Emmott, C. E. G. C.
McKie, J. H.
Thomas, J. P. L.


Emrys-Evans, P. V.
Macmillan, H. (Stockton-on-Tees)
Thomson, Sir J. D. W.


Erskine-Hill, A. G.
Magnay, T.
Tufnell, Lieut.-Commander R. L.


Evans, D. O. (Cardigan)
Manningham-Buller, Sir M.
Wakefield, W. W.


Fildes, Sir H.
Margesson, Capt. Rt. Hon. H. D. R.
Wardlaw-Milne, Sir J. S.


Furness, S. N.
Mayhew, Lt.-Col. J.
Waterhouse, Captain C.


Gledhill, G.
Moore, Lieut.-Col. T. C. R.
Wells, S. R.


Grant-Ferris, R.
Moreing, A. C.
Wickham, Lt.-Col. E. T. R.


Granville, E. L.
Morris, J. P. (Salford, N.)
Wise, A. R.


Greene, W. P. C. (Worcester)
Nail, Sir J.
Young, A. S. L. (Partick)


Gretton, Col. Rt. Hon. J.
Nicolson, Hon. H. G.



Gridley, Sir A. B.
O'Neill, Major Rt. Hon. Sir Hugh
TELLERS FOR THE AYES.—


Grimston, R. V.
Palmer, G. E. H.
Lieut.-Colonel Sir A. Lambert


Gunston, Capt. D. W.
Penny, Sir G.
Ward and Captain Hope.




NOES.


Acland, R. T. D. (Barnstaple)
George, Megan Lloyd (Anglesey)
Noel-Baker, P. J.


Adams, D. (Consett)
Gibbins, J.
Parkinson, J. A.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Grenfell, D. R.
Potts, J.


Attlee, Rt. Hon. C. R.
Griffiths, G. A. (Hemsworth)
Pritt, D. N.


Barr, J.
Griffiths, J. (Llanelly)
Quibell, D. J. K.


Bonn, Rt. Hon. W. W.
Hall, G. H. (Aberdare)
Riley, B.


Bevan, A.
Harris, Sir P. A.
Roberts, W. (Cumberland, N.)


Bromfield, W.
Jagger, J.
Sexton, T. M.


Cocks, F. S.
Jenkins, Sir W. (Neath)
Silverman, S. S.


Daggar, G.
Kelly, W. T.
Smith, Ben (Rotherhithe)


Davies, S, O. (Merthyr)
Lawson, J. J.
Smith, E. (Stoke)


Dobbie, W.
Logan, D. G.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Edwards, Sir C. (Bedwellty)
McGovern, J.
Strauss, G. R. (Lambeth, N.)


Fletcher, Lt.-Comdr. R. T. H.
MacNeill, Weir, L.
Taylor, R. J. (Morpeth)


Foot, D. M.
Mander, G. le M.
Tinker, J. J.


Garro Jones, G. M.
Marshall, F.



George, Rt. Hon. D. Lloyd (Carn'v'n)
Messer, F.
TELLERS FOR THE NOES.—




Mr. Mathers and Mr. Groves.

Adjourned accordingly at Ten Minutes after Eleven o'Clock.